USD/CNH marches beyond 7.2700 on mixed China PMI, US PCE Inflation eyed


Share:
  • USD/CNH grinds higher around the yearly top after mixed China official PMIs for June.
  • China NBS Manufacturing PMI matches upbeat forecasts but stays below 50.0, Non-Manufacturing PMI improves.
  • PBoC keeps defending Yuan but fails so far amid hawkish Fed talks, upbeat US data.
  • Fed’s preferred inflation gauge, headlines surrounding US-China ties eyed for intraday directions.

USD/CNH picks up bids to print mild gains around the yearly top marked the previous day as China’s headline PMIs flash mixed outcome for June on early Friday. With this, the offshore Chinese Yuan (CNH) pair remains firmer for the third consecutive day to around 7.2720 by the press time.

China’s headline NBS Manufacturing PMI matches 49.0 market forecasts in June versus 48.8 expected while the Non-Manufacturing PMI rose past 50.2 analysts’ estimations to 53.2, compared to 54.5 previous readings, during the said month.

Apart from the PMIs, the USD/CNH pair also justifies the market’s lack of confidence in the People’s Bank of China’s (PBoC) defense of the onshore Chinese Yuan (CNY) via daily fix and open market operations.  That said, the PBoC keeps fueling USD/CNY fix, making it the highest since November 2022 at the latest.

On the contrary, hawkish Federal Reserve (Fed) comments and upbeat US data keeps the US Dollar firmer.

Fed Chair Jerome Powell spoke at the Fourth Conference on Financial Stability hosted by the Bank of Spain, in Madrid, while saying, “A strong majority of Fed policymakers expect two or more rate hikes by year-end.” Additionally, Atlanta Federal Reserve President Raphael Bostic told reporters regarding future rate increases, as reported by Reuters, that he doesn’t see as much urgency to move as stated by others, including Chairman Jerome Powell. The policymaker, however, recently took a U-turn while saying, “I think it's unambiguous that inflation has fallen considerably."

On Thursday, the US Gross Domestic Product (GDP) Annualized, mostly known as the Real GDP, grew at the 2.0% rate for the first quarter (Q1) of 2023 versus the 1.3% initial estimation. Further, the US Weekly Initial Jobless Claims slumped to 239K for the week ended on June 23 compared to 265K expected and revised prior. However, the Personal Consumption Expenditure (PCE) Price for Q1 2023 eased to 4.1% QoQ from 4.2% expected and prior whereas the Pending Home Sales slumped to -2.7% MoM for May compared to 0.2% expected and -0.4% prior (revised).

On a different page, mixed headlines about the US-China ties also propel the USD/CNH price as US Treasury Secretary Janet Yellen ‘hopes’ to visit China to re-establish contacts but also showed readiness to take actions to protect national security interests even at an economic cost.

While portraying the mood, Wall Street closed positive but the US 10-year and two-year Treasury bond yields also rallied while the US Dollar Index (DXY) refreshed its weekly top before retreating to 103.40. It should be noted that the S&P500 Futures print mild gains by the press time.

Having witnessed the initial market reaction to China’s official activity data for June, the USD/CNH pair traders will concentrate on the risk catalysts ahead of the Federal Reserve’s (Fed) favorite inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index, for May for clear directions. Also important to watch will be the news concerning the US-China ties amid the latest geopolitical jitters.

Technical analysis

Rising wedge at multi-month top challenges USD/CNH bulls unless the quote defies the bearish chart formation by crossing the 7.2800 hurdle. That said, a downside break of the 7.2400 support will confirm the wedge pattern suggesting the downturn for theoretical target of 7.0670.

Additional important levels

Overview
Today last price 7.2672
Today Daily Change -0.0016
Today Daily Change % -0.02%
Today daily open 7.2688
 
Trends
Daily SMA20 7.172
Daily SMA50 7.0628
Daily SMA100 6.9769
Daily SMA200 7.0008
 
Levels
Previous Daily High 7.277
Previous Daily Low 7.2334
Previous Weekly High 7.2286
Previous Weekly Low 7.128
Previous Monthly High 7.1344
Previous Monthly Low 6.8962
Daily Fibonacci 38.2% 7.2604
Daily Fibonacci 61.8% 7.2501
Daily Pivot Point S1 7.2425
Daily Pivot Point S2 7.2162
Daily Pivot Point S3 7.1989
Daily Pivot Point R1 7.2861
Daily Pivot Point R2 7.3034
Daily Pivot Point R3 7.3297

 

 

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

EUR/USD stabilizes above1.0800, looks to post weekly gains

EUR/USD stabilizes above1.0800, looks to post weekly gains

EUR/USD continues to trade in a tight channel above 1.0800 in the second half of the day on Friday, as the improving risk mood makes if difficult for the USD to gather strength. The pair remains on track to snap a five-week losing streak.

EUR/USD News

GBP/USD clings to modest daily gains above 1.2650

GBP/USD clings to modest daily gains above 1.2650

GBP/USD trades in positive territory above 1.2650 in the American session on Friday. The bullish opening in Wall Street doesn't allow the USD to gather strength and helps the pair stay on track to close higher for the fifth consecutive day.

GBP/USD News

Gold holds steady above $2,020 as US yields edge lower

Gold holds steady above $2,020 as US yields edge lower

Gold regained its traction and stabilized above $2,020 after falling below this level during the European trading hours. The benchmark 10-year US Treasury bond yield is down nearly 1% on the day below 4.3%, allowing XAU/USD to keep its footing heading into the weekend.

Gold News

Ethereum price risks decline as increasing exchange supply raises chances of profit taking

Ethereum price risks decline as increasing exchange supply raises chances of profit taking

Ethereum price crossed $3,000 several times this week but the altcoin failed to sustain above this key level, raising concerns regarding its price trend. ETH price faces the risk of decline as the supply of the altcoin on exchanges is on the rise. 

Read more

Up go stocks, down go bonds

Up go stocks, down go bonds

We knew that yesterday was going to be a good day – at least for the stock markets, given that Nvidia defied the expectations that it would - maybe – fail to deliver $20bn sales in the latest quarter. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures