USD/CNH recovers losses on dismal China data

Offshore yuan has surrendered early gains, possibly due to weak data - China industrial profits tanked in the Jan-Feb period.
US 10-year treasury yield is flashing early sign of bull reversal. An uptick in the benchmark yield could put a bid under the greenback.

Omkar Godbole FXStreet Contributor

USD/CNH is currently trading largely unchanged on the day at 6.7227, having hit a low of 6.7157 earlier today.

The CNH (offshore yuan exchange rate) found offers after data released an hour ago showed China's industrial profits tanked 14 percent year-on-year in the January-February period, the biggest drop since 2011.

The slide in industrial profits is hardly surprising, as the economy has slowed down considerably over the last few quarters, courtesy of the Sino-US trade tensions.

Looking forward, USD/CNH could turn positive on the day and my revisit the recent high of 6.7310 if the US 10-year treasury yield rises, as suggested by yesterday's bullish inside day reversal candle. As of writing, the benchmark yield is trading at 2.42 percent.

Technical Levels

1. R3 6.7467
2. R2 6.7355
3. R1 6.7294
PP 6.7182
1. S1 6.7121
2. S2 6.7009
3. S3 6.6948

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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