Weak China Data Weighs On Yuan
The latest set of Chinese PMI data sets released overnight have revealed the impact of fresh COVID lockdowns as the country battles omicron. The Caixin manufacturing PMI was seen falling to 49.1 in January, marking a decline from the prior month’s 50.9 reading and a fresh contraction in the factory sector. Indeed, the figure was lower than the 50.1 result expected. With this latest decline, the factory sector in the world’s second largest economy is now at its lowest level since February 2020, during the height of the pandemic.
Given the issues facing the Chinese economy as it continues to run a zero-COVID strategy, this reading will no doubt increase expectations of further action likely to be taken in a bid to support the Chinese economy. With this in mind, there are near term downside risks for CNH, particularly against USD, given the Fed’s hawkish shift.
Technical Views
USCNH
While prices has been moving lower within a bear channel, we’ve seen bullish divergence creeping in along recent lows. With MACD and RSI turning higher following the large bullish engulfing candle off the 6.3246 level, the focus is now on an upside channel break. Bulls can look for a break of 6.4018, targeting 6.4241 initially and 6.4490 above.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.