USD/CNH pares the biggest daily gains in 2.5 years near 6.8000 amid recession, Taiwan concerns


  • USD/CNH retreats from three-month high as traders seek fresh clues.
  • A jump in Chinese Means of Production Prices is also likely to have favored sellers.
  • Fears surrounding China’s economic growth, and tussles over Taiwan restrict the immediate downside.
  • Mixed US data, and Fedspeak also keep traders on edge ahead of Wednesday’s Fed Minutes.

USD/CNH extends pullback from a three-month high to 6.8020 while consolidating the biggest daily jump since March 2020 during Tuesday’s Asian session. The offshore Chinese yuan (CNH) pair fails to justify the recent risk-off mood. The reason could be linked to the market’s reassessment of fears that the world’s second-largest economy is on the way to recession despite the policymakers’ strenuous efforts.

The latest weakness could also be attributed to the second-tier data from China as Xinhua News Agency quotes the National Bureau of Statistics (NBS) while mentioning, “Of the 50 major goods monitored by the government, which include seamless steel tubes, gasoline, coal, fertilizer and some agricultural products mainly used for processing, 27 saw their prices increase, while 20 posted lower prices.”

However, the growth fears seem stronger as China President Xi Jinping showed readiness to take more measures after the previous day’s downbeat statistics.

Xinhua News Agency quoted China President Xi saying they will “use new development ideas in economic growth”. The comments rolled out after downbeat prints of Retail Sales, Industrial Production and Loan Growth for July.

It should be noted that the fears about the US-China tussles grow and challenge the USD/CNH sellers as Xinhua reported that China had imposed sanctions on several Taiwan separatists.

Previously, the visit of multiple US lawmakers to Taiwan irritated Beijing, leading to fierce military drills near the Taiwan border and an escalation of geopolitical risks.

On the same line were the latest comments from China’s State Planner suggesting, “Macro policies should be strong, reasonable and moderate in expanding demand actively,” per Reuters.

On Monday, US NY Empire State Manufacturing Index for August dropped to -31.3 from 11.1 in July and 8.5 in market forecasts. Further, the US August NAHB homebuilder confidence index also fell to 49 versus 55, its lowest level since the initial months of 2020. Although the recent US data joins the previous week’s softer inflation figures, the Fed policymakers remain hawkish, which keeps the USD/CNH buyers hopeful.

Amid these plays, the US 10-year Treasury yields snapped a two-day downtrend around 2.79%, while the S&P 500 Futures declined 0.10% intraday at the latest.

Moving on, US Building Permits, Housing Starts and Industrial Production numbers for July should direct intraday moves of the USD/CNH pair ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting minutes.

Technical analysis

USD/CNH holds onto the previous day’s upside break of an ascending resistance line from late May, now support around 6.7980, despite the latest pullback. The bullish bias targeting the yearly high near 6.8385 also takes clues from MACD and RSI.

Additional important levels

Overview
Today last price 6.7998
Today Daily Change -0.0136
Today Daily Change % -0.20%
Today daily open 6.8134
 
Trends
Daily SMA20 6.7589
Daily SMA50 6.7304
Daily SMA100 6.6557
Daily SMA200 6.5098
 
Levels
Previous Daily High 6.82
Previous Daily Low 6.7358
Previous Weekly High 6.7712
Previous Weekly Low 6.7164
Previous Monthly High 6.792
Previous Monthly Low 6.6804
Daily Fibonacci 38.2% 6.7879
Daily Fibonacci 61.8% 6.768
Daily Pivot Point S1 6.7595
Daily Pivot Point S2 6.7056
Daily Pivot Point S3 6.6753
Daily Pivot Point R1 6.8437
Daily Pivot Point R2 6.874
Daily Pivot Point R3 6.9279

 

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD stays near 1.0400 in thin holiday trading

EUR/USD stays near 1.0400 in thin holiday trading

EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.

EUR/USD News
GBP/USD struggles to find direction, holds steady near 1.2550

GBP/USD struggles to find direction, holds steady near 1.2550

GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.

GBP/USD News
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook

Gold holds above $2,600, bulls non-committed on hawkish Fed outlook

Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.

Gold News
IRS says crypto staking should be taxed in response to lawsuit

IRS says crypto staking should be taxed in response to lawsuit

In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.

Read more
2025 outlook: What is next for developed economies and currencies?

2025 outlook: What is next for developed economies and currencies?

As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures