USD/CNY: Yuan drops despite surging Chinese overnight repo rate

Yuan drops amid a continued tightening of liquidity conditions in China
Weakness in the US stock futures keeps the dollar bid.

Omkar Godbole FXStreet Contributor

Yuan is on the offer, pushing USD/CNY higher despite the tightening of liquidity conditions in China.

The nation's volume-weighted average of overnight repo rate, one of the best indicators of general liquidity in China, rose to 3.28% early Friday – the highest level since 2015 – extending its recent run higher. The central bank is sucking out liquidity to rein in leverage.

While the CNY gained ground on Thursday, seemingly due to the repo rate uptick, it has failed to keep the momentum going so far today. CNY is trading at 6.4640 per US dollar at press time, down 0.22% on the day. The currency rose by 0.5% to 6.4491 on Thursday.

The anti-risk dollar looks to be benefitting from the risk-off tone in the financial markets. The futures tied to the S&P 500 are down 0.33%, while the Asian stocks are trimming early gains. The losses in the US stock futures indicate a continuation of the flight to safety seen earlier this week on fears of social-media-driven hedge fund selling and due to concerns that the US fiscal stimulus will be smaller than hoped.

Technical levels

USD/CNY

Overview
Today last price	6.4645
Today Daily Change	0.0150
Today Daily Change %	0.23
Today daily open	6.4495

Trends
Daily SMA20	6.4747
Daily SMA50	6.5196
Daily SMA100	6.6179
Daily SMA200	6.8178

Levels
Previous Daily High	6.4934
Previous Daily Low	6.4492
Previous Weekly High	6.4973
Previous Weekly Low	6.4567
Previous Monthly High	6.5867
Previous Monthly Low	6.5156
Daily Fibonacci 38.2%	6.4661
Daily Fibonacci 61.8%	6.4765
Daily Pivot Point S1	6.4347
Daily Pivot Point S2	6.4198
Daily Pivot Point S3	6.3905
Daily Pivot Point R1	6.4789
Daily Pivot Point R2	6.5082
Daily Pivot Point R3	6.5231

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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