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  • USD/CNH extends the previous declines amid hopes of economic change, doubts over phase-one.
  • China’s official activity numbers become even more important after the previous month’s upbeat readings.
  • US data, trade headlines can offer intermediate moves during the year-end trading lull.

USD/CNH stays on the back foot while trading around 6.9915 amid early Monday. The pair has been under pressure since late-November while the recently announced changes to the loan system seem to have pleased the Chinese Yuan (CNH) buyers.

Chinese ambassador to the US Cui Tiankai crossed wires during the weekend while reiterating Beijing’s firm dislike of the Trump administration’s interference with the internal issues. Even so, the diplomat showed the dragon nation’s readiness to abide by the phase-one promises in ‘earnest’ mode.

Also supporting the CNH strength could be the expected increase in business credits after the People’s Bank of China (PBOC) ordered the financial institutions to follow Loan Prime Rate (LPR) rather than the previous benchmark.

The PBOC has recently been increasing the official onshore Chinese Yuan (USD/CNY) rate and the same could also be considered as a reason to the pair’s latest declines. The recent USD/CNY fix is 6.9805 versus Friday’s 6.9879. The PBOC fix was boosted the last-Thursday by 266 pips to 6.9801.

It’s worth mentioning that trading sentiment stays mildly positive amid the year-end sparse conditions.

Investors are keenly awaiting December month’s official Purchasing Managers’ Index (PMI) numbers after the positive surprised witnessed the last month. Actual data is scheduled for publishing at 01:00 GMT on Tuesday.

Technical Analysis

21-day Exponential Moving Average (EMA) level around 7.0065 acts as an immediate upside barrier while November month bottom close to 6.9525 offers nearby support to watch.