USD/CNH prints six-day downtrend as PBOC battles China, Evergrande pessimism

USD/CNH takes offers to refresh intraday low, extends previous week pullback from monthly high.
China Industrial Profits ease, World Bank cuts GDP forecasts.
PBOC keeps pumping the money flow, Shenzen assesses Evergrande.
Risk catalysts keep the driver’s seat, Fed Chair Powell will be eyed as well.

Anil Panchal FXStreet

USD/CNH stays offered for the sixth consecutive day, down 0.05% intraday near $6.4565 during early Tuesday. In doing so, the offshore China Yuan (CNH) pair manages to cheer the People’s Bank of China’s (PBOC) optimism over successfully taming the Evergrande saga, despite multiple negatives from home and abroad.

Starting with the economics, China's Industrial Profits eased to 10.1% YoY versus 16.4% expected in August.

Also challenging the USD/CNH bears are the fears over Evergrande as the Shenzen government investigates the wealth management unit of Evergrande and urged to repay investors. Furthermore, challenges to the world’s second-largest economy, emanating from power cuts adds to the fears for the pair sellers of late.

The same help Goldman Sachs to cut China's 2021 GDP growth forecast while the Wall Street Journal (WSJ) hints at a new threat to the chip shortage, namely power cuts in Beijing. Following that, the World Bank said, per Reuters, “Economic recovery in east Asia and Pacific faces a setback,” while revising down China’s GDP to 8.5% for 2021.

Furthermore, the Federal Reserve (Fed) policymakers’ support for tapering and uncertainty over the US debt limits and stimulus issues also weigh on the market sentiment, underpinning the US dollar’s safe-haven demand.

Above all, the PBOC’s heavy liquidity injection, recently by 100 billion yuan, keeps the USD/CNH bears hopeful of overcoming the crisis at home.

It’s worth noting that the risk barometers, namely the stock futures and AUD/USD remain on the back foot while the US 10-year Treasury yields poke a three-month top marked the previous day at the latest.

Looking forward, the PBOC has a tough task to defy the grim concerns for China's economic growth, failing to do so will highlight the Fed tapering chatters and can recall the USD/CNH bulls.

Technical analysis

Despite failures to cross a two-month-old resistance line, around $6.4835 by the press time, USD/CNH bears struggles to conquer the 100-DMA support near $6.4535 that holds the key to a monthly low surrounding $6.4245.

additional important levels

Overview
Today last price	6.4576
Today Daily Change	-0.0018
Today Daily Change %	-0.03%
Today daily open	6.4594

Trends
Daily SMA20	6.4554
Daily SMA50	6.469
Daily SMA100	6.4532
Daily SMA200	6.472

Levels
Previous Daily High	6.4692
Previous Daily Low	6.4534
Previous Weekly High	6.488
Previous Weekly Low	6.4525
Previous Monthly High	6.5102
Previous Monthly Low	6.4473
Daily Fibonacci 38.2%	6.4595
Daily Fibonacci 61.8%	6.4632
Daily Pivot Point S1	6.4522
Daily Pivot Point S2	6.4449
Daily Pivot Point S3	6.4364
Daily Pivot Point R1	6.468
Daily Pivot Point R2	6.4765
Daily Pivot Point R3	6.4838

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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