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  • USD/CNH fails to cheer downbeat Caixin Manufacturing PMI as PBOC’s action seems taken more positively.
  • Upbeat sentiment concerning the US-China trade relations add to the optimism for the Asian currency.
  • US data, trade headlines will be followed for fresh impulse.

USD/CNH trades around 6.9660 while heading into the European session on Thursday. The pair seems to justify the latest action from the People’s Bank of China (PBOC) and Caixin Manufacturing PMI.

The pair is modestly stronger after the PBOC’s 50 basis points (bps) of cut to the Reserve Requirement Ratio (RRR) and softer than expected print of December month Caixin data. Even so, expectations that the PBOC move will bode well for the Chinese growth and a fifth above 50 reading by the private manufacturing gauge tames the pair’s rise.

Also exerting the downside pressure on the quote is increasing optimism surrounding the US-China trade relations. The US President Donald Trump has recently confirmed January 15 as the date to sign the phase-one deal. Additionally, comments from the Republican leader and the White House Adviser Peter Navarro increase the odds of a good start to phase two talks.

The market’s risk tone has been a bit lighter and the same reduces the US dollar’s (USD) safe-haven appeal. The US 10-year treasury yields stay positive to 1.92% while S&P 500 Futures also rise from 0.30% to 3,240.

Moving on, the US traders will still be in the holiday mood and might give less importance to the December month US Markit PMI. However, a stark difference from the 52.5 expected and prior could offer an interesting start during the first US session in the year 2020.

Technical Analysis

A downward sloping trend line since December 03, at 6.9780 now, grinds the USD/CNH prices lower towards early-November lows near 6.9500.