USD/CNH teases sellers around 6.4650 on China PMI details
- USD/CNH reverses from intraday high following the key activity data for June.
- China’s NBS Manufacturing PMI, Non-Manufacturing PMI cross market consensus but stayed below priors.
- Sentiment remains indecisive with upbeat stock futures and lacklustre Treasury yields.
- US-China tensions, covid headlines and Fedspeak may entertain traders ahead of US ADP Employment Change.
USD/CNH fails to keep the previous day’s bounce off weekly low, reverses from intraday high, during early Wednesday. In doing so, the Chinese currency (CNH) pair reacts to the mixed official PMI data for June amid subdued markets.
China’s NBS Manufacturing PMI rose past 50.8 forecast to 50.9 but lagged behind the 51.00 prior. On the same line, Non-Manufacturing PMI also stayed below 55.2 prior despite crossing 52.7 market consensus with 53.5 readings for June.
Read: Chinese PMIs beat estimates but are below priors
Although the coronavirus (COVID-19) joined mixed Fedspeak to tease USD/CNH bulls earlier in the day, hopes of China’s fast recovery than the US seems to have recalled the bears. Also, chatters that the People’s Bank of China (PBOC) will lead the Fed in monetary policy adjustments, signaled by Bloomberg, add to the pair’s weakness.
While the covid conditions seem to improve in Beijing, other key economies in the Asia-Pacific region, including Australia, highlight the fears of the Delta variant of the coronavirus. On the other hand, the Fed policymakers remain hesitant to accept the inflation woes, needless to mention the push for tapering and rate hike, which in turn tests the greenback buyers. Additionally, the latest sluggish moves of the US Treasury yields offer an extra barrier to the US dollar strength and weigh on the USD/CNH prices.
It should, however, be noted that the equities are mildly positive and have been teasing records since in recent days, which in turn reduces the US dollar’s safe-haven demand and may keep USD/CNH bears hopeful.
Even so, today’s US ADP Employment Change for June, expected 600K versus 978K prior, will be the key to watch for fresh impulse ahead of Friday’s Nonfarm Payrolls.
Read: ADP Nonfarm Payrolls Preview: Going contrarian? How to trade this leading indicator
Technical analysis
USD/CNH failed to pierce the 100-day SMA, around 6.4700, during Tuesday’s corrective pullback, which in turn directs sellers toward the weekly low near 6.4520.
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.
