USD/CNH rebounds above 6.7500 despite Caixin Manufacturing PMI missing estimates
- USD/CNH has shown a V-shape recovery from 6.7480 amid a recovery in the USD Index.
- Caixin Manufacturing PMI has landed at 49.2, lower than the expectations of 49.5.
- The risk-perceived assets are facing the heat amid soaring anxiety ahead of the Fed’s monetary policy decision.
The USD/CNH pair has shown sheer volatility after the IHS Markit reported a lower-than-anticipated Caixin Manufacturing PMI data. The asset dropped to near 6.7480 but found a stellar buying interest and demonstrated a V-shape recovery above 6.7540. The economic data has landed at 49.2 lower than the expectations of 49.5 but higher than the former release of 49.0.
The street was expecting a better-than-expected performance after getting positive cues from China’s official Manufacturing PMI data. The official Manufacturing PMI released by China’s National Bureau of Statistics (NBS) landed at 50.1, higher than the consensus of 49.7 and the prior figure of 47.0.
It is worth noting that Chinese households remained busy in January’s last week for Lunar New Year celebrations, therefore, firms didn’t operate at full capacity. Despite that, the Chinese economy maintained resilience in its production activities.
Meanwhile, the US Dollar Index (DXY) has extended its recovery above the immediate resistance of 101.75 as anxiety among investors is soaring ahead of the interest rate decision by the Federal Reserve (Fed). Also, investors are turning risk averse and dumping the risk-perceived assets like S&P500 futures, which have extended their downside. The return generated by 10-year US Treasury bonds has dropped to 3.50% on expectations that Fed chair Jerome Powell will announce a smaller interest rate hike.
As per the CME FedWatch tool, the chances of a 25 basis point (bps) interest rate hike announcement by the Fed are more than 99%.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
