USD/CNH: Modestly flat above 50-D EMA ahead of China trade balance data

  • USD/CNH is chopped between the US-China trade stalemate and Fed’s dovish bias.
  • China trade balance can offer fresh impulse followed by the US PPI.
  • 50-D EMA limits immediate downside while 6.9000 holds the upside capped.

With the Fedspeak continuous to weigh over the US Dollar (USD) and uncertainty surrounding the US-China trade deal keeps growing, the USD/CNH pair traders modestly flat near 6.8745 during early Friday.

The US Federal Reserve Chairman, Jerome Powell, held his bearish bias during the second day of Testimony where he cited concerns of weak inflation likely dragging for long. Following the suit were some of the key Federal Reserve officials like New York President John Williams and President of the Federal Reserve's Minneapolis branch Neel Kashkari.

The US President Donald Trump conveyed his disappointment from the Chinese act of not importing more of the US farm products even after promising at the G20. On another hand, Chinese media spot key US diplomats to being envious to the dragon nation.

Investors await June month trade data from China for fresh direction amid headlines signaling less likeliness of a trade deal between the world’s two largest economies. Forecasts suggest Trade Balance number to rise from $41.65 billion to $44.65 billion with an expected improvement in imports to -4.5% from -8.5% contrasting with likely slump in exports to -2.0% versus 1.1% prior.

Following that, the US Producer Price Index (PPI) data for June will be the key to follow. Headline PPI number bears the consensus to soften to 0.0% and 1.6% from 0.1% and 1.8% respectively on a monthly and a yearly basis. Further, PPI ex Food and Energy could decline to 2.2% from 2.3% on a YoY format while likely remaining unchanged to 0.2% on a MoM basis.

Technical Analysis

A sustained break of 6.8728 comprising 50-day exponential moving average (50-D EMA) can fetch prices to 6.8600 and 6.8430 ahead of pushing bears towards current month low near 6.8166. Meanwhile, pair’s rise past-0.9000 mark, close to multiple tops marked during the month, can propel prices to 6.9160 and 6.9400 during the further rise.

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