USD/CNH: Bulls and bears jostle above $6.4500 on China’s return amid brighter mood, upbeat data
|- USD/CNH bounces off intraday low, stays sidelined for the second consecutive second day.
- China Caixin Services PMI, US debt ceiling extension favor risk appetite.
- Firmer sentiment weighs on USD ahead of US NFP.
USD/CNH remains depressed around 6.4520, down 0.05% on a day amid traders’ indecision during early Friday.
China’s return after a week, backed by the People’s Bank of China’s (PBOC) readiness to keep the markets liquid favor the offshore Chinese Yuan (CNH) buyers. Also positive for the CNH is the Caixin Services PMI for September, 53.4 versus 50.7 expected and 46.7 prior.
Additionally, the market’s upbeat sentiment, backed by the US Congress’ passage of the bill favoring the debt ceiling extension by $408 billion until early December 2021, also challenges USD/CNH bulls. On the same line were the recent headlines suggesting the receding tension between the US and China.
On the contrary, the pre-NFP anxiety and firmer US Treasury yields, near the four-month high, underpin USD/CNH advances. Additionally, the firming of the Fed tapering woes, amid stronger early signals for the US Nonfarm Payrolls (NFP), up for publishing today, also favor the pair buyers. Furthermore, suspension of Fantasia bonds from trading challenges the market optimism.
Amid these plays, the US Dollar Index (DXY) picks up bids tracking the US 10-year Treasury yields, up 1.8 basis points to 1.59% by the press time. Further, Wall Street marked another positive day by the end of Thursday and S&P 500 Futures follow suit at the latest.
As USD/CNH traders struggle for clear direction, the US jobs report will be important to watch. Also, developments concerning the Sino-American ties and Fed tapering woes shouldn’t be missed as well.
Read: US Nonfarm Payrolls September Preview: How far will markets go when the Fed tapers?
Technical analysis
Multiple failures to cross the 100-DMA on a daily closing basis, around 6.4550 by the press time, keep USD/CNH bears directed towards a three-week-old support line near 6.4365.
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