- USD/CNH takes the bids to refresh intraday top, stays around multi-day high.
- Pessimism surrounding Chinese banks, Sino-American ties propel latest moves.
- Fed vs. PBOC divergence underpins the broad bullish bias.
- US Consumer Confidence, risk catalysts and Fedspeak are important ahead of NFP.
USD/CNH prints a three-day uptrend as bulls flirt with the 6.9200 threshold while keeping reins around the highest levels since August 2020. That said, the offshore Chinese yuan (CNH) pair’s latest run-up could be linked to the market’s risk-off mood, as well as concerns surrounding Beijing.
Politico came out with the news suggesting the Biden administration to ask congress to approve a $1.1 billion arms sale to Taiwan, which in turn appears to have triggered the latest run-up. Before that, the movement of the US vessels in the Taiwan Strait and American diplomats’ visits to Taipei teased China.
It’s worth noting that Financial Times (FT) raised concerns over the mounting pressure on Chinese banks to also add to the market’s fears. “Chinese residential property owners are rushing to pay off their mortgages early, heaping pressure on commercial banks that were already struggling to identify attractive lending opportunities,” said the news.
That said, the divergence between the monetary policies of the People’s Bank of China (PBOC) and the US Federal Reserve (Fed) appear to be the main catalyst for the USD/CNH bull run. Recently, Fed Chair Jerome Powell led the policy hawks towards ignoring the economic slowdown fears in a mission to tame inflation, which in turn propelled the US Dollar Index (DXY) to a fresh 19-year high, before stepping back to 108.80, around 108.90 at the latest.
On Monday, Dallas Fed Manufacturing Business Index improved to -12.9 versus -20.2 expected and -22.6 prior. It should be noted that Minneapolis Federal Reserve Bank President Neel Kashkari stated that people now understand how serious we are about getting inflation back to 2%.
Amid these plays, the US 10-year Treasury yields retreat to 3.10% following the two-day uptrend to refresh the monthly high. With this, the S&P 500 Futures pares mild losses while tracking Wall Street.
While the risk-off mood and the firmer DXY could keep the USD/CNH buyers hopeful, today’s US Consumer Confidence for August and comments from Fed speakers could entertain intraday traders. However, major attention will be given to Friday’s US jobs report as Fed Chair Powell raised concerns over economic slowdown and job market stress in his Jackson Hole speech.
Technical analysis
A clear upside break of the ascending resistance line from April 2021, near 6.9050 by the press time, directs USD/CNH buyers towards June 2019 peak surrounding 6.9630.
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 stabilizes near 1.0400 after upbeat US data
EUR/USD consolidates daily recovery gains near 1.0400 following the release of upbeat United States data. Q3 GDP was upwardly revised to 3.1% from 2.8% previously, while weekly unemployment claims improved to 220K in the week ending December 13.
GBP/USD extends slide approaches 1.2500 after BoE rate decision
GBP/USD stays on the back foot and break lower, nearing 1.2500 after the Bank of England (BoE) monetary policy decisions. The BoE maintained the bank rate at 4.75% as expected, but the accompanying statement leaned to dovish, while three out of nine MPC members opted for a cut.
Gold approaches recent lows around $2,580
Gold resumes its decline after the early advance and trades below $2,600 early in the American session. Stronger than anticipated US data and recent central banks' outcomes fuel demand for the US Dollar. XAU/USD nears its weekly low at $2,582.93.
Bitcoin slightly recovers after sharp sell-off following Fed rate cut decision
Bitcoin (BTC) recovers slightly, trading around $102,000 on Thursday after dropping 5.5% the previous day. Whales, corporations, and institutional investors saw an opportunity to take advantage of the recent dips and added more BTC to their holdings.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.