USD/CNH slips from intraday top to sub-7.0700 area after China Caixin PMI

• USD/CNH takes a U-turn from 7.0715 but snaps four-day losing streak.
• China’s Caixin Services PMI surged to the highest over a decade to 58.4 in June.
• North Korea supports China amid global ire against the Hong Kong security law.

USD/CNH bounces off 7.0675 to 7.0700 during early Friday’s trading. The pair recently dropped after China’s June month Caixin Services PMI. However, buyers remain hopeful amid the on-going US-China tussle over the Hong Kong issue.

China’s Caixin Services PMI surged to the highest since April 2010 to 58.4 versus 49.9 forecasts and 55 prior. The figures follow the recently published upbeat China activity numbers, be it official PMIs or Caixin Manufacturing PMI. As a result, China’s off-shore Yuan benefited after the data.

However, the recent move fails to conquer the previous upside momentum backed by the fears of the Sino-American tussle. US Secretary of State Mike Pompeo and Hong Kong activist Jonathan Law criticized China’s Communist Party’s (CCP) latest decision on the security law. On Thursday, Aussie PM Scott Morrison and UK also offered help for Hong Kong people and gained red-eyes from China.

On the contrary, the Global Times (GT) came out with the news suggesting further monetary easing from the People’s Bank of China (PBOC). Furthermore, a lack of major market activity amid a light calendar and ahead of the US session off also affects the pair’s latest moves. It should also be noted that the record high coronavirus (COVID-19) numbers from the US also helped the pair’s weakness off-late.

Amid these catalysts, S&P 500 Futures catch a breath near a two-week high with a 0.05% loss to 3,127. Though, Japan’s Nikkei 225 and stocks in China register mild gains as we write.

Considering the lack of major data/events on the calendar, traders might be bored with the virus and Hong Kong headlines. However, any surprise announcements will be taken seriously and shouldn’t be missed.

Technical analysis

The pair’s sustained weakness below 50-day EMA level of 7.0855 keeps the bears hopeful of re-witnessing the June month low near 7.0400.