USD/CNH stays firmer past 6.9200 at two-year high on downbeat China concerns

USD/CNH takes the bids to refresh intraday top, stays around multi-day high.
Pessimism surrounding Chinese banks, Sino-American ties propel latest moves.
Fed vs. PBOC divergence underpins the broad bullish bias.
US Consumer Confidence, risk catalysts and Fedspeak are important ahead of NFP.

Anil Panchal FXStreet

USD/CNH prints a three-day uptrend as bulls flirt with the 6.9200 threshold while keeping reins around the highest levels since August 2020. That said, the offshore Chinese yuan (CNH) pair’s latest run-up could be linked to the market’s risk-off mood, as well as concerns surrounding Beijing.

Politico came out with the news suggesting the Biden administration to ask congress to approve a $1.1 billion arms sale to Taiwan, which in turn appears to have triggered the latest run-up. Before that, the movement of the US vessels in the Taiwan Strait and American diplomats’ visits to Taipei teased China.

It’s worth noting that Financial Times (FT) raised concerns over the mounting pressure on Chinese banks to also add to the market’s fears. “Chinese residential property owners are rushing to pay off their mortgages early, heaping pressure on commercial banks that were already struggling to identify attractive lending opportunities,” said the news.

That said, the divergence between the monetary policies of the People’s Bank of China (PBOC) and the US Federal Reserve (Fed) appear to be the main catalyst for the USD/CNH bull run. Recently, Fed Chair Jerome Powell led the policy hawks towards ignoring the economic slowdown fears in a mission to tame inflation, which in turn propelled the US Dollar Index (DXY) to a fresh 19-year high, before stepping back to 108.80, around 108.90 at the latest.

On Monday, Dallas Fed Manufacturing Business Index improved to -12.9 versus -20.2 expected and -22.6 prior. It should be noted that Minneapolis Federal Reserve Bank President Neel Kashkari stated that people now understand how serious we are about getting inflation back to 2%.

Amid these plays, the US 10-year Treasury yields retreat to 3.10% following the two-day uptrend to refresh the monthly high. With this, the S&P 500 Futures pares mild losses while tracking Wall Street.

While the risk-off mood and the firmer DXY could keep the USD/CNH buyers hopeful, today’s US Consumer Confidence for August and comments from Fed speakers could entertain intraday traders. However, major attention will be given to Friday’s US jobs report as Fed Chair Powell raised concerns over economic slowdown and job market stress in his Jackson Hole speech.

Technical analysis

A clear upside break of the ascending resistance line from April 2021, near 6.9050 by the press time, directs USD/CNH buyers towards June 2019 peak surrounding 6.9630.

Additional important levels

Overview
Today last price	6.9218
Today Daily Change	0.0044
Today Daily Change %	0.06%
Today daily open	6.9174

Trends
Daily SMA20	6.8033
Daily SMA50	6.7582
Daily SMA100	6.7036
Daily SMA200	6.5328

Levels
Previous Daily High	6.9326
Previous Daily Low	6.8904
Previous Weekly High	6.8982
Previous Weekly Low	6.8338
Previous Monthly High	6.792
Previous Monthly Low	6.6804
Daily Fibonacci 38.2%	6.9165
Daily Fibonacci 61.8%	6.9066
Daily Pivot Point S1	6.8944
Daily Pivot Point S2	6.8713
Daily Pivot Point S3	6.8522
Daily Pivot Point R1	6.9366
Daily Pivot Point R2	6.9557
Daily Pivot Point R3	6.9788

Author

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.

AUD/USD softens as risk-off mood meets FOMC countdown

The Aussie Dollar loses 0.11% against the Greenback on Tuesday as risk appetite remains negative amid calls from AI company CEOs to slow development, while the FOMC monetary policy meeting looms. Expectations for a Fed rate hike undermine the AUD/USD, which trades at 0.7130.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold set to fall toward $4,000 as Warsh faces a Fed rate-hike dilemma

As the Federal Reserve monetary policy announcement approaches and the Middle East war intensifies, the US Dollar resumes its advance. Gold price posted a tepid attempt to recover its shine in early August, but with renewed USD demand, the bright metal faltered miserably and is now closer to the $4,000 mark than the encouraging $4,700 peak from a month ago.

Ethereum continues to attract capital despite impending rate hike and Clarity Act failure

Ethereum declined to $2,400 on Tuesday after the Clarity Act failed to progress in the Senate. Despite that and the market's near certainty of an interest rate hike at the next Federal Reserve (Fed) meeting, the top altcoin has continued to attract fresh capital. Ethereum buyers have been dominating sellers over the past few days.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.