USD/CNH: Bid above 6.94 ahead of key China data

USD/CNH tests trendline resistance ahead of China data.
China’s trade surplus and money supply figures are due at 02:00 GMT.
A below-forecast China exports figure could hurt risk assets.

Omkar Godbole FXStreet Contributor

The USD/CNH is flashing green with above-6.94 print ahead of the release of China’s trade and money supply figures.

The currency pair tested the resistance at 6.9462 – the trendline connecting May 20 and May 31 highs – earlier today and is currently trading at 6.9424.

A daily close above the trendline hurdle would mark an upside break of the three-week long consolidation above 6.90 and shift risk in favor of a rise to 7.00.

The bullish close may happen today if the key China data disappoints expectations.

The data due at 02:00 GMT is expected to show that China’s exports growth in Yuan terms spiked to 15.5% in May from 3.1% in April. Meanwhile, imports growth is forecasted to jump to 15.9% from 10.3%. The trade surplus is expected to widen to CNY 140.505 billion in May from 93.570 billion in April.

Further, M2 Money Supply is expected to have risen by 8.6% year-on-year in May.

Yuan will likely take a hit and so would the risk assets if China’s exports drop, indicating weakening global demand conditions. The risk-off could be severe if China reports a bigger surplus with the US.

Pivot levels

1. R3 7.0029
2. R2 6.9827
3. R1 6.9631
PP 6.943
1. S1 6.9233
2. S2 6.9032
3. S3 6.8836

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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