USD/CNH refreshes multi-month low below 6.3600 amid mixed China PMI, fears of peaking growth
|- USD/CNH fails to keep early Asian recovery moves from the lowest since May 2018.
- China NBS Manufacturing PMI eased, Non-Manufacturing PMI jumped in May.
- Off in US highlights trade, political headlines for fresh impulse.
USD/CNH reverses early Asian gains while taking offers around 6.3600 during Monday’s Asian session. In doing so, the quote pays a little heed to China’s official PMI data for May amid mildly optimistic markets.
China’s headlines NBS Manufacturing PMI stabilized around 51.00 in May, matching market forecasts, but Non-Manufacturing PMI jumped above 52.7 expectations and 54.9 previous readouts to 55.2 during the stated month. “The stabilization in May came after a decline in activity in April, reinforcing expectations by analysts that Chinese economic activity may be peaking in the second quarter of the year,” said South China Morning Post following the release.
Read: China PMIs: May official composite PMI at 54.2, Services big beat
It’s worth mentioning that the US-China tussles do escalate in the recent days and Beijing also losses good friends like New Zealand of late. However, the hopes of the People’s Bank of China (PBOC) keeping the economy strong, be it at the cost of tapering if needed, seems to weigh on the USD/CNH prices.
Also negative for the USD/CNH could be the US dollar weakness amid the reflation fears and hopes of further stimulus, not to forget a jump in vaccinations favoring the strong economic rebound from the pandemic.
Amid these plays, S&P 500 Futures print mild gains, which in turn weigh on the US dollar index (DXY), down 0.07% intraday. It’s worth mentioning that the strong print of the US inflation figures and PCE data put a fresh bid under the US dollar on Friday but the greenback bulls couldn’t last long amid mixed expectations and a long weekend in the US.
Given the lack of major data/events, USD/CNH traders should pay attention to the risk catalysts for fresh direction. Among them, the US-China trade headlines and geopolitical news will be the key.
Technical analysis
Unless crossing 6.40 level comprising lows marked in February and early May, USD/CNH bears keep reins.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.