- USD/CNY takes a U-turn from 7.0934, still positive on a day after flashing two-day losses.
- PBOC cuts 14-day reverse report rate, ADB slashes economic forecasts.
- Virus woes, geopolitical tension with India weigh on the quote.
- Second-tier US data, risk catalysts to offer near-term directions to the traders.
Having initially surged to 7.0934, USD/CNY currently drops to 7.0890, up 0.06% on a day, during Thursday’s Asian session. Even so, the pair snaps the previous two-day fall as virus woes join the People’s Bank of China’s (PBOC) rate cut. Additionally, China’s tussle with India and the Asian Development Bank’s (ADB) downbeat economic forecasts also weaken the prices.
The PBOC offered a surprise rate cut during early Thursday. The Chinese central bank cut the rate on 14-day reverse repurchase agreements to 2.35% vs. 2.55% previous. Though, the 7-day reverse repo remains unchanged at 2.20%.
Other than the PBOC rate cut, the fears relating to the fresh spread of the coronavirus (COVID-19) join the Indian-China tension to drag the quote downwards. Although the latest numbers from China, especially from Beijing recede from the latest highs, the Chinese capital is still under partial lockdown while holding down major flight operations. Elsewhere, India recently gave more power to its military while dealing with the dragon nation. New Delhi also bears the allegations of disapproving the purchase of Chinese goods and trigger trade war.
Elsewhere, the ADB slashed China’s 2020 growth forecast to 1.8% from 2.3% while expecting a 7.4% growth for 2021.
It should also be noted that the market’s risk-tone seems bogged down by the pandemic fears, which in turn pays less attention to US President Donald Trump’s signal of the cure of the deadly disease. In doing so, the US 10-year Treasury yields dropped 2.6 basis points (bps) to 0.70% whereas stocks in China post mild losses but those from Japan decline over 1.0% by the press time.
Looking forward, traders will have to closely observe the qualitative fundamental factors for immediate direction amid a lack of major data/events ahead of the US session.
Technical analysis
21-day EMA near 7.0935 restricts the pair’s immediate upside, which in turn highlights the importance of a 100-day EMA level of 7.0638 during the USD/CNY quote’s further weakness.
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.
Recommended content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.