USD/CNH: Trapped between key MAs, China data fails to impress Yuan bulls
- USD/CNH is stuck between the 50- and 200-day averages.
- CNH is struggling to draw bids despite the upbeat China PMIs.
- Risk reset could yield a convincing move below 50-day average.
USD/CNH is lacking a clear directional bias at press time and seems trapped between the 50- and 200-day averages at 6.9758 and 6.9836, respectively.
China’s NBS Manufacturing PMI (Jan) came in at 50, as expected, following December’s reading of 50.2. A reading above 50 indicates expansions while a below=50 reading indicates contraction.
The gauge managed to avoid a dip into contraction territory in January despite the coronavirus outbreak.
Meanwhile, the Non-Manufacturing activity picked up pace, as indicated by the uptick in the PMI to 54.1 from December’s 53.5.
So far, however, the data has done little to strengthen the bid tone around the Yuan, helping the USD/CNH pair hold the 50-day average support at 6.9758.
The support, however, could be breached during the day ahead if the risk reset in the global equities gathers pace.
The US stocks posted moderate gains on Thursday after WHO called coronavirus outbreak a global health emergency but backed China’s efforts to contain the virus, calming fears of a global pandemic.
However, at press time, the futures on the S&P 500 are reporting marginal losses. If markets again turn risk averse, the pair could make another attempt to scale the psychological resistance of 7.00. The pair printed a high of 7.003 on Thursday but closed at 6.9807.