USD/CNH slides to 7.1500 as PBoC defends Yuan, China stimulus loom


Share:
  • USD/CNH drops to more than one-week low, stays pressured near intraday bottom of late.
  • PBoC keeps defending Yuan with heavy OMOs, pours cold water on expectations of witnessing strong USD/CNY fix.
  • Comparatively better US PMIs put  floor under US Dollar price but pre-Fed positioning allow offshore Chinese Yuan to remain firmer.
  • US CB Consumer Confidence eyed ahead of Wednesday’s FOMC.

USD/CNH stands on the slippery ground as it drops to the lowest levels in seven days to around 7.1500 during early Tuesday, close to 7.1600 by the press time. In doing so, the offshore Chinese Yuan (CNH) justifies the People’s Bank of China’s (PBoC) efforts to defend the domestic currency, as well as cheer the talks about more stimulus from the dragon nation.

The PBoC marked another disappointment for the USD/CNY forecasters by fixing the reference rate at 7.1406 versus 7.1451 prior and 7.1860 market forecasts. It’s worth noting that the USD/CNY closed near 7.1882 the previous day. While defending the USD/CNY fix, the Chinese central bank announced a 3-month bills swap worth five billion Yuan while marking a net 29 billion Yuan injection by the Open Market Operations (OMOs).

Elsewhere, the Chinese media conveyed details of the Communist Party's Politburo meeting on Monday that cited new difficulties and challenges for the economy while also showing the policymakers’ readiness for prudent monetary and fiscal policies. It’s worth observing, however, that the policymakers pledged measures to step up support for the economy amid a flagging post-COVID recovery, reported Reuters.

On the same line, China state planner National Development and Reform Commission (NDRC) issued a notice to promote the high-quality development of private investment. That said, NDRC also pledged encouragement of participation in some projects of transport, water and clean energy, as well as in new infrastructure and modern agriculture.

Amid these plays, stocks in China rally but the US stock futures print mild losses while the Treasury bond yields dribble and trigger the US Dollar’s retreat.

That said, the US Dollar Index (DXY) refreshed a two-week high near 101.40 during a five-day uptrend, mildly bid near 101.45 by the press time, amid comparatively better PMI data and upbeat yields. That said, the first readings of the US S&P Global Manufacturing PMI for July improved to 49.0 from 46.3 prior and 46.4 market forecasts while the Services PMI eased to 52.4 versus 54.0 expected and 54.4 previous readings. With this, the Composite PMI edged lower to 52.0 from 53.2 prior and 53.1 market forecasts. However, Chicago Fed National Activity Index for June slid to -0.32 from -0.28 prior (revised) and 0.03 market forecasts.

Moving on, China stimulus news and the PBoC efforts may keep weighing on the USD/CNH price but the US CB Consumer Confidence for July, expected at 112.1 versus 109.70 prior, and Wednesday’s Federal Open Market Committee (FOMC) monetary policy meeting announcements are crucial to watch for clear directions.

Technical analysis

A convergence of the five-week-old ascending trend line joins the 50-DMA to restrict the immediate USD/CNH downside near 7.1600.

Additional important levels

Overview
Today last price 7.1626
Today Daily Change -0.0230
Today Daily Change % -0.32%
Today daily open 7.1856
 
Trends
Daily SMA20 7.215
Daily SMA50 7.1566
Daily SMA100 7.0305
Daily SMA200 7.0065
 
Levels
Previous Daily High 7.2134
Previous Daily Low 7.1788
Previous Weekly High 7.2368
Previous Weekly Low 7.1484
Previous Monthly High 7.2856
Previous Monthly Low 7.0668
Daily Fibonacci 38.2% 7.1921
Daily Fibonacci 61.8% 7.2002
Daily Pivot Point S1 7.1718
Daily Pivot Point S2 7.158
Daily Pivot Point S3 7.1372
Daily Pivot Point R1 7.2064
Daily Pivot Point R2 7.2272
Daily Pivot Point R3 7.241

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

EUR/USD stabilizes above1.0800, looks to post weekly gains

EUR/USD stabilizes above1.0800, looks to post weekly gains

EUR/USD continues to trade in a tight channel above 1.0800 in the second half of the day on Friday, as the improving risk mood makes if difficult for the USD to gather strength. The pair remains on track to snap a five-week losing streak.

EUR/USD News

GBP/USD clings to modest daily gains above 1.2650

GBP/USD clings to modest daily gains above 1.2650

GBP/USD trades in positive territory above 1.2650 in the American session on Friday. The bullish opening in Wall Street doesn't allow the USD to gather strength and helps the pair stay on track to close higher for the fifth consecutive day.

GBP/USD News

Gold holds steady above $2,020 as US yields edge lower

Gold holds steady above $2,020 as US yields edge lower

Gold regained its traction and stabilized above $2,020 after falling below this level during the European trading hours. The benchmark 10-year US Treasury bond yield is down nearly 1% on the day below 4.3%, allowing XAU/USD to keep its footing heading into the weekend.

Gold News

Ethereum price risks decline as increasing exchange supply raises chances of profit taking

Ethereum price risks decline as increasing exchange supply raises chances of profit taking

Ethereum price crossed $3,000 several times this week but the altcoin failed to sustain above this key level, raising concerns regarding its price trend. ETH price faces the risk of decline as the supply of the altcoin on exchanges is on the rise. 

Read more

Up go stocks, down go bonds

Up go stocks, down go bonds

We knew that yesterday was going to be a good day – at least for the stock markets, given that Nvidia defied the expectations that it would - maybe – fail to deliver $20bn sales in the latest quarter. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures