- USD/CNH drops for the sixth consecutive day, stays pressured around intraday low.
- PBOC keeps pumping the markets, hopes of economic recovery battles IMF comments.
- Sino-American tussles, Russia-Ukraine drama also try to stop the bears.
- Second-tier US housing, trade numbers may entertain trades but Fed Chair Powell’s speech is the key.
USD/CNH cheers US dollar pullback to print a six-day downtrend around $6.3280 during early Wednesday.
In doing so, the Chinese currency (CNH) pair justifies the economic recovery hopes conveyed by the ex-People’s Bank of China (PBOC) official while paying a little heed to the central bank’s heavy liquidity injection.
A former member of People’s Bank of China’s (PBOC) monetary policy committee Yu Yongding said, “China's economy can grow 5.5% in 2022, and policymakers could set a higher economic growth target as long as inflation and systemic financial risks are under control.”
His comments were in contrast to the International Monetary Fund’s (IMF) downbeat economic forecasts. “We project global growth this year at 4.4%, 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China,” said No.2 official Gita Gopinath per Reuters.
It should be noted that the PBOC has recently cut benchmark rates and propelled ample liquidity into the markets to defend against the Fed’s rate hikes. The Chinese central bank injected 100 billion yuan on a net basis at the latest.
Elsewhere, geopolitical concerns relating to Russia’s readiness to attack Ukraine and the America COMPETES Act weigh on the market sentiment and should have helped the US Treasury yields. However, pre-Fed anxiety stops the US bond sellers from retaking controls after five consecutive days of absence.
Moving on, the Fed’s readiness to scale back easy money contrasts the PBOC’s mammoth liquidity infection and hence signals the USD/CNH rebound if the US Fed policymakers meet the hawkish expectations.
Read: Federal Reserve Interest Rate Decision Preview: Inflation, Omicron and equities
Technical analysis
An eight-month-old descending support line near $6.3238 restricts immediate USD/CNH downside amid oversold RSI conditions.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.