USD/CNH pulls back from monthly resistance trendline amid Hong Kong concerns
|- USD/CNH fails to hold on to recovery gains as protests in Hong Kong magnify US-China trade pessimism.
- Trump’s comments from the New York Economic Club luncheon will keep the spotlight.
The US-China trade story recent got another negative turn with the US condemning Hong Kong protests and pushes China to respect the nation’s autonomy. With this, the USD/CNH pair fails to cross a monthly trend line resistance while trading around 7.0028 during Tuesday’s Asian session.
While the US President’s refrain from reiterating the previous signals to tariff cut on Chinese goods triggered initial risk aversion during Monday, renewed protests in Hong Kong and the US meddling dim prospects of a trade deal between the world’s two largest economies.
The US State Department’s latest statement urges China to respect commitments that Hong Kong will enjoy a high degree of autonomy. The Trump administration also condemns violence in the protests.
That said, the US 10-year treasury yields remain on the back foot to 1.92% while Asian stocks also mark losses during early hours of trading.
On the economic front, China’s inflation numbers flashed mixed signals during the weekend and hence traders will wait for Thursday’s Industrial Production and Retail Sales for fresh impulse. However, the bearish bias of the People’s Bank of China (PBOC), as conveyed through recent USD/CNY fixes and comments from the policymakers, could keep traders entertained.
Looking at the near-term, the United States (US) President Donald Trump is up for speaking at the Economic Club Luncheon in New York and will be observed closely for any hints to trade talks with China.
Technical Analysis
Unless providing a daily closing beyond the monthly falling trend line, at 7.0055 now, prices are less likely to aim for current month top near 7.0520. Alternatively, June month high around 6.9600 could offer immediate key support to the pair.
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