- USD/CNH fails to hold onto recovery gains.
- China’s official PMIs surprised markets with positive figures.
- World Bank recently downgraded China’s 2020 GDP forecast, PBOC adviser signals ‘flood-like’ stimulus.
- Risk-tone remains mildly positive.
While taking clues from the surprisingly positive China activity data, USD/CNH snaps the previous two-day recovery while declining to 1.1080 amid early Tuesday.
China’s March month official Manufacturing and Non-Manufacturing PMIs surprised marked by crossing 50.00 mark against expectations of further contraction amid coronavirus (COVID-19) woes. While the headline Manufacturing PMI crossed 45 forecast and 35.7 prior with 52.00, the Non-Manufacturing PMI rose to 52.3 compared to 37.8 expected and 29.6 earlier reading.
While the official data favors the recovery of Chinese yuan, updates from the PBOC adviser and World Bank seem to cap the pair’s declines.
An external adviser to the People's Bank of China’s (PBOC) monetary policy committee (MPC), Ma Jun, said that setting a GDP target may force China to resort to flood-like stimulus. Additionally, the policymakers said that GDP growth between 4 to 5% will be difficult to achieve for China. On the other hand, World Bank downgraded China’s 2020 GDP forecast to 2.3% versus 6.1% reported for 2019.
It should also be noted that the market’s risk-tone remains mildly positive with comments from US President offering a smooth carrying of the previous day’s risk reset. That said, the US 10-year treasury yields seesaw around 0.70% with most Asian markets, also in China, marking profits by the press time.
Following the busy morning in Asia, mainly due to the comparatively heavy economic calendar, investors may now return to COVID-19 news while searching for fresh direction.
Technical analysis
A seven-day-old falling trend line near 7.1225/30 guards the pair’s immediate upside whereas February month high close to 7.0570 could please the sellers during the 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 climbs higher toward 1.1100 ahead of US CPI release
EUR/USD extends its daily rally toward 1.1100 on Thursday as the Euro benefits from the EU's decision to pause countermeasure against US tariffs for 90 days. Meanwhile, the US Dollar remains under pressure ahead of CPI data, further boosting the pair.
GBP/USD rises above 1.2900, US CPI data awaited
GBP/USD preserves its bullish momentum and trades above 1.2900 on Thursday. The British Pound capitalizes on risk appetite, courtesy of Trump's tariff pause, allowing the pair to push higher as market focus shits to March inflation data from the US.
Gold clings to gains above $3,110, closes in on all-time high
Gold builds on Wednesday's impressive gains and trades above $3,110 on Thursday. The broad-based selling pressure surrounding the US Dollar and retreating US bond yields on growing fears of a deepening trade war between China and the US fuel XAU/USD's rally.
US CPI data set to reveal March inflation dip as markets weigh impact of Trump’s tariffs
As measured by the CPI, inflation in the US is set to rise at an annual pace of 2.6% in March, down slightly from the 2.8% reported in February. Core CPI inflation, which excludes the volatile food and energy categories, is expected to ease to 3% in the same period from a year earlier
Trump’s tariff pause sparks rally – What comes next?
Markets staged a dramatic reversal Wednesday, led by a 12% surge in the Nasdaq and strong gains across major indices, following President Trump’s unexpected decision to pause tariff escalation for non-retaliating trade partners.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.