- USD/CNH has sensed barricades after a mild recovery around 7.0600 amid upbeat Caixin Manufacturing PMI.
- China‘s official Manufacturing PMI has landed at 49.4 vs. expectations of 48.9.
- Weak cues from US ADP Employment suggest a future US NFP decline.
The USD/CNH pair is looking to conclude its recovery move around 7.0600 as China’s official Manufacturing PMI has landed better than expectations. The Caixin Manufacturing PMI has been recorded at 49.4 for November month vs. 48.9 as projected and October’s release of 49.2. A surprise rise in the official Manufacturing PMI is expected to support the Chinese yuan ahead.
Meanwhile, the risk profile in the global market is extremely bullish as the Federal Reserve (Fed) has given a green signal to deceleration in interest rate hike pace from December monetary policy meeting. The US Dollar Index (DXY) has attempted a recovery after dropping to near 105.50, however, the downside bias is rock solid.
S&P500 futures display a muted start in the Asian session after a juggernaut rally in New York. A significant rise in investors’ risk appetite has impacted returns on US Treasury bonds. The 10-year US Treasury yields have dropped to near 3.61%.
Weak employment numbers in November, a slowdown in economic activities, and a surprise decline in October’s inflation report have backed less-hawkish commentary from Fed chair Jerome Powell. The Fed chair is not ready to crash the economy instead of cleaning the inflation mess. Accelerating interest rates by the Fed has triggered fears of financing risks dramatically, therefore, the Fed has preferred to go a little light on interest rates this time and hike the interest rates by 50 basis points (bps).
Going forward, investors will keep an eye on US Nonfarm Payrolls (NFP) data, which will release on Friday. Expectations favor a steep decline in the number of fresh payrolls following cues from the US Automatic Data Processing (ADP) Employment data.
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