- USD/CNY prints the biggest daily gains in a month despite showing no major reaction to strong China PMI data.
- China Caixin Services PMI crossed previous readouts during December.
- China policymakers brace for yuan restrictions, Premier Li hints at more stimulus to stabilize growth.
- DXY tracks firmer yields amid increasing hopes of Fed rate hikes, balance sheet normalization ahead US ISM Services PMI.
USD/CNY seesaws around $6.3680 while keeping the biggest daily gains in a month, up 0.20% intraday, during early Thursday. In doing so, the Chinese yuan (CNY) pair seems to believe in the latest comments from Beijing, even as the reaction to the latest data is muted when cheering hawkish hopes concerning the US Federal Reserve’s (Fed) next step.
China’s Caixin Services PMI rose past 52.1 figures flashed in November to 53.3 for December. The private services gauge followed its Manufacturing counterpart.
However, hints from the Chinese policymaker suggesting actions to control CNY strength and stabilize the economy are likely to fuel the USD/CNY prices of late. That said, Reuters came out with the news spotting China outlet while saying the Chinese authorities are seen implementing more drastic measures after the recent multi-pronged attempts.
Following that, China Premier Li Keqiang said, “The government will implement greater tax and fee cuts for businesses and would provide targeted support for COVID-affected sectors such as services,” per Reuters.
On the other hand, the US dollar cheered hawkish signals from the Federal Open Market Committee (FOMC) Meeting Minutes suggesting a faster rate-hike and plans to discuss balance-sheet normalization. Following the Minutes, the US bond yields rally and the Fed interest rate futures point at the 80% chance of a hike in March 2022.
Given the strong US ADP Employment Change for December, 804K versus 400K expected, statements from the Fed Minutes like, “conditions for a rate hike could be met relatively soon if the recent pace of labor market improvements continues” also propelled the US bond coupons.
While portraying the mood, the US 10-year Treasury yields jumped to the highest level since April 2021 by the end of Wednesday’s North American session, up 3.4 basis points (bps) to 1.70%, which in turn drowned the Wall Street benchmark. Though, the recent pause in the US bond yields allowed S&P 500 Futures to print mild gains of around 4,700.
Moving on, monthly prints of the US Good Trade Balance and ISM Services PMI for December, as well as weekly prints of US Jobless Claims, will direct immediate USD/CNY moves, mostly to the north. Though, cautious optimism prevails ahead of Friday’s US Nonfarm Payrolls (NFP).
Unless successfully crossing a two-month-old descending resistance line around $6.3750, USD/CNY bears keep targeting to refresh the three-year low, flashed on December 31, 2021, around $6.3400.
Additional important levels
|Today last price||6.3676|
|Today Daily Change||0.0123|
|Today Daily Change %||0.19%|
|Today daily open||6.3553|
|Previous Daily High||6.3728|
|Previous Daily Low||6.353|
|Previous Weekly High||6.3785|
|Previous Weekly Low||6.3404|
|Previous Monthly High||6.3845|
|Previous Monthly Low||6.3404|
|Daily Fibonacci 38.2%||6.3652|
|Daily Fibonacci 61.8%||6.3606|
|Daily Pivot Point S1||6.3479|
|Daily Pivot Point S2||6.3406|
|Daily Pivot Point S3||6.3281|
|Daily Pivot Point R1||6.3677|
|Daily Pivot Point R2||6.3802|
|Daily Pivot Point R3||6.3875|
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.