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  • USD/CNH remains on the bids after China’s Industrial Profits data.
  • Recent trade headlines have been positive but fall short to counter broad USD strength.

Another reading of mixed data from China propels the USD/CNH pair to 7.1290 during the initial trading session on Friday.

China’s August month Industrial Profits declined -2.0% versus +2.6% prior on YoY while staying unchanged to -1.7% on a monthly basis. Earlier during the month, activity numbers and inflation data have also troubled the traders.

Alike data, trade headlines have also failed to provide any clear direction as the US-China goodwill gestures confront the latest news that the US refrains to renew licenses to do business with China’s Huawei and the Chinese delegation, led by Vice Premier Liu He, will visit Washington on October 10-11 to renew trade talks.

Investors could seek clues to the US Dollar’s (USD) overall strength amid upbeat signals from the Fed policymakers and global geopolitical tension making it’s the cleanest amongst the dirty lot.

Also affecting the move is the news that the People’s Bank of China (PBOC) gauges demands for 14, 28 & 63-day reverse repos while injecting 30 billion Chinese Yuan (CNY) via 14-day reverse repos.

Looking forward, no major data is up for publishing during the Asian session, making it solely dependent on trade/political headlines. Though, active calendar during the US session, mainly including data from the US, will entertain momentum traders afterward.

Technical Analysis

Unless breaking 7.1400/10 area including highs marked on August 06/23 and August 29/30 lows, bulls are less likely to aim for 7.1620 and 7.1840 resistances. On the flip side, pair’s break below 21-day simple moving average (DMA) level of 7.1154 highlights two-week-old rising trend-line and 23.6% Fibonacci retracement level of June-September upside, around 7.1075/90, as key support.