USD/CNH holds above 7.000, bulls reject the supply
- Chinese data has hit the market but focus is on central banks.
- Yuan faces tough economic times ahead due to broken supply and demand chains.
USD/CNH has been trading between a low of 6.9836 and a high of 7.0300 at the start of the week in what has been a turbulent session in Asia following the various central bank interventions and emergency rate cuts. At the time of writing, USD/CNH is trading at 7.0060.
Firstly, Chinese data arrived as follows:
Breaking: China’s Feb data dump: Awful Retail Sales and Industrial Production numbers – Aussie unfazed
- China’s February Retail Sales YoY, the number arrived at -20.5% vs. +0.8% exp and +8.0% last.
- Industrial Output YoY at -13.5% and +1.5% exp and +6.9% last.
- Fixed Asset Investment YoY stood at -24.5% vs. +2.8% expected and +5.4% last.
Central banks get aggressive in measures
Prior to the data, we had the news that the Reserve Bank of New Zealand cut by 0.74basis points, the Fed cut to zero and the Reserve Bank of Australia stands ready to purchase government bonds.
As for the yuan, the Fed's move dented the dollar but bulls stepped up. The problem for the yeuan, is that China faces tough economic times ahead due to broken supply chains on a global scale and a scale back in demand pertaining to toe COVIC-19 pandemic. Downgrade's to China’s 1Q20 GDP full year 2020 forecasts will be a focus and likely pressure USD/CNH higher, especially should the dollar catch a flight to safety bid on the back of demand for US Treasuries as the number of confirmed global virus cases increase.
USD/CNH levels