USD/CNH refreshes multi-month low below 6.3600 amid mixed China PMI, fears of peaking growth

USD/CNH reverses early Asian gains while taking offers around 6.3600 during Monday’s Asian session. In doing so, the quote pays a little heed to China’s official PMI data for May amid mildly optimistic markets.

China’s headlines NBS Manufacturing PMI stabilized around 51.00 in May, matching market forecasts, but Non-Manufacturing PMI jumped above 52.7 expectations and 54.9 previous readouts to 55.2 during the stated month. “The stabilization in May came after a decline in activity in April, reinforcing expectations by analysts that Chinese economic activity may be peaking in the second quarter of the year,” said South China Morning Post following the release.

Read: China PMIs: May official composite PMI at 54.2, Services big beat

It’s worth mentioning that the US-China tussles do escalate in the recent days and Beijing also losses good friends like New Zealand of late. However, the hopes of the People’s Bank of China (PBOC) keeping the economy strong, be it at the cost of tapering if needed, seems to weigh on the USD/CNH prices.

Also negative for the USD/CNH could be the US dollar weakness amid the reflation fears and hopes of further stimulus, not to forget a jump in vaccinations favoring the strong economic rebound from the pandemic.

Amid these plays, S&P 500 Futures print mild gains, which in turn weigh on the US dollar index (DXY), down 0.07% intraday. It’s worth mentioning that the strong print of the US inflation figures and PCE data put a fresh bid under the US dollar on Friday but the greenback bulls couldn’t last long amid mixed expectations and a long weekend in the US.

Given the lack of major data/events, USD/CNH traders should pay attention to the risk catalysts for fresh direction. Among them, the US-China trade headlines and geopolitical news will be the key.

Technical analysis

Unless crossing 6.40 level comprising lows marked in February and early May, USD/CNH bears keep reins.