USD/CNH: Range play continues after PBOC rate decision

USD/CNH's week-long consolidation continues as PBOC keeps rates unchanged, as expected.
The uptick in the S&P 500 futures looks to be weighing over the US dollar.
Lingering Indo-China border tensions are likely to cap gains in CNH.

Omkar Godbole FXStreet Contributor

USD/CNH is trading in the narrow range of 7.0595 to 7.0970 for the seventh straight day on Monday.

The People's Bank of China (PBOC) kept one-year and five-year loan prime rates unchanged at 3.85% and 4.65%, respectively. The bank was expected to keep rates unchanged and the decision has so far failed to influence the offshore Chinese yuan (CNH).

However, the central bank raised the daily yuan fix to 7.0865 early Monday from Friday's fix at 7.0913. In addition, the S&P 500 futures have erased the early losses and the risk currencies like the AUD are gaining ground against the greenback.

The yuan, therefore, could soon chalk out some gains against the US dollar. The USD/CNH pair is currently trading largely unchanged on the day at 7.0750. The US stock futures gapped lower in early Asia, pushing the greenback higher, as Germany and US registered a faster rise in the coronavirus cases over the weekend.

Traders need to keep an eye on headlines related to the Indo-China border tensions and escalation of tensions could put pressure on the offshore Yuan.

As per media reports, there has been no disengagement between India and China and both sides are enhancing ground and air assets in theatre.

Technical levels

1. R3 7.1074
2. R2 7.0958
3. R1 7.0875
PP 7.0759
1. S1 7.0676
2. S2 7.056
3. S3 7.0477

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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