USD/CNH sidelined near 6.67 after PBOC's status quo rate decision
- PBOC keeps rates unchanged, fails to move the needle on CNH pairs.
- USD/CNH reached the lowest level since July 2018 early Tuesday.
The USD/CNH pair sees little action following the Chinese central bank's decision to keep borrowing costs unchanged.
The People's Bank of China (PBOC) retained the interest rate at 3.85% as expected. China's economic recovery looks to be gathering traction with Exports rising and local governments engaging in a binge of debt-fueled construction projects, as noted by The New York Times. Even consumer spending is showing signs of life. The economy is now expected to register a 2% full-year growth.
As such, the central bank has little reason to cut rates contrary to the Eurozone situation, where inflation has dropped into the negative territory. Further, the resurgence of the coronavirus crisis has triggered fears of a deeper and prolonged economic crisis. The US, too, is seeing a rise in virus cases and is facing election uncertainty.
Hence, the offshore yuan (CNH) could continue to gain ground against the US dollar and other major currencies.
The USD/CNH is currently trading largely unchanged on the day near 6.67, having hit a low of 6.6670, the level last seen in July 2018. The currency pair peaked at 7.1964 in May and has been falling ever since.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
