|

USD/CNH slides below 7.2300 even as IMF cuts China’s growth forecasts, US Core PCE Inflation eyed

  • USD/CNH consolidates weekly gains while fading the bounce off a fortnight low.
  • IMF cuts Asian region economic estimations and holds China responsible.
  • Easing hawkish Fed bets exert downside pressure on the DXY.
  • Fed’s preferred inflation gauge will be crucial to watch ahead of next week’s FOMC.

USD/CNH takes offers to refresh the intraday low near 7.2260 as it pares the weekly gains during Friday’s Asian session. In doing so, the offshore Chinese yuan (CNH) pair fails to justify the International Monetary Fund’s (IMF) grim outlook for the dragon nation amid a broad weakness in the US dollar.

“The IMF cut Asia's economic forecasts on Friday as global monetary tightening, rising inflation blamed on the war in Ukraine, and China's sharp slowdown dampened the region's recovery prospects, “ said Reuters. The news also adds that the IMF cut Asia's growth forecast to 4.0% this year and 4.3% next year, down 0.9% point and 0.8 points from April, respectively. The slowdown follows a 6.5% expansion in 2021. Further details suggest that the Washington-based institute expects China's growth to slow to 3.2% this year, a 1.2-point downgrade from its April projection, after an 8.1% rise in 2021. The world's second-largest economy is seen growing 4.4% next year and 4.5% in 2024, the IMF said as per Reuters.

Elsewhere, the DXY retreats to 110.50, following Thursday’s recovery from the five-week-low, as Fed hawks get mixed details of the overall strong US data. The US Gross Domestic Product (GDP) rose 2.6% on an annualized basis, more than expected, in the third quarter (Q3). Even so, a fifth consecutive fall in private consumption challenged the Fed hawks as it showed the policymakers are gradually nearing the target of slowing down private domestic demand, which in turn might favor the easy rate hike talks for December in the next week’s Federal Open Market Committee (FOMC) meeting.

That said, the sluggish US Treasury yields and the risk-off mood also challenge the US dollar. The US 10-year Treasury yields dropped to a two-week low on Thursday and are bracing for the first weekly loss in 11, which in turn allowed equities to have a nice week despite the latest weakness in numbers.

Moving on, the US Core PCE Price Index for September, expected to rise to 5.2% versus 4.9% prior, will be crucial for the USD/CNH pair traders to watch for clear directions. A firmer print of the Fed’s preferred inflation gauge could add strength to the yields and hawkish Fed bets, which in turn will be favorable for the pair buyers.

Technical analysis

A failure to cross the one-month-old horizontal resistance area surrounding 7.2700-2675 directs USD/CNH back toward the 21-DMA support near 7.1885.

Additional important levels

Overview
Today last price7.2282
Today Daily Change-0.0288
Today Daily Change %-0.40%
Today daily open7.257
 
Trends
Daily SMA207.1869
Daily SMA507.0619
Daily SMA1006.8993
Daily SMA2006.6874
 
Levels
Previous Daily High7.269
Previous Daily Low7.1658
Previous Weekly High7.284
Previous Weekly Low7.1902
Previous Monthly High7.2674
Previous Monthly Low6.8882
Daily Fibonacci 38.2%7.2296
Daily Fibonacci 61.8%7.2053
Daily Pivot Point S17.1922
Daily Pivot Point S27.1274
Daily Pivot Point S37.089
Daily Pivot Point R17.2954
Daily Pivot Point R27.3338
Daily Pivot Point R37.3986

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD trims losses and returns to the 1.1750 area

The US Dollar resumed its decline in the American afternoon, helping EUR/USD trim early losses. The pair trades around 1.1750 as market participants gear up for the European Central Bank monetary policy decision and the United States Consumer Price Index.

GBP/USD flirts with 1.3400 after nearing 1.3300

The GBP/USD changed course after dipping with UK inflation data, and trades near the 1.3400 mark, as investors expect the Bank of England to deliver a 25 basis points interest rate cut after the two-day meeting on Thursday.

Gold flirts with weekly range hurdle; looks to US CPI for fresh impetus

Gold is seen consolidating near the top end of the weekly range, below the $4,350 level, during the Asian session on Thursday. The US Dollar preserves the overnight recovery gains and caps the bullion, though a weaker risk tone and dovish Fed bets act as a tailwind for the non-yielding yellow metal. Traders now look to the US consumer inflation figures for cues about the Fed's rate-cut path in 2026 before placing fresh directional bets around the XAU/USD pair.

Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines

Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.

Monetary policy: Three central banks, three decisions, the same caution

While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week. 

Crypto Today: Bitcoin, Ethereum, XRP slide further as risk-off sentiment deepens

Bitcoin faces extended pressure as institutional investors reduce their risk exposure. Ethereum’s upside capped at $3,000, weighed down by ETF outflows and bearish signals. XRP slides toward November’s support at $1.82 despite mild ETF inflows.