USD/CNH mildly positive around 7.1000 following China Caixin Services PMI
- USD/CNH fails to cheer upbeat China data amid coronavirus resurgence risk.
- ADB cuts China’s GDP forecast for 2020.
- Risk-tone remains heavy, eyes US data/virus updates for fresh impulse.
China’s better than forecast Caixin Services PMI fails to exert any downside pressure on the USD/CNH, currently up 0.20% to the intraday high near 7.1065, as markets in China open for Friday’s trading.
China’s March month Caixin Services PMI followed the footsteps of Manufacturing gauge while surging beyond prior 26.5 to 43.00.
Read: China Caixin/IHS Markit March Services PMI at 43.0 vs 26.5 in February
The reasons for the latest run-up could be traced from the Asian Development Bank’s (ADB) downbeat projection of China’s 2020 GDP growth. ADB slashes China’s 2020 GDP forecast to 2.3% vs. 5.2% previous estimate.
Also propelling the pair could be comments from Communist Party Secretary of China's Wuhan who said that the risk of coronavirus resurgence in the city is still high.
On the other hand, Washington Governor stretched stay-at-home order until May 04, 2020. Further, the global rating giant S&P held its US credit rating at AA+ with a stable outlook while also expecting the economic losses to offset in 2021.
Market’s risk-tone remains heavy as the US 10-year treasury yields fail to carry the previous day’s recovery move, currently down three basis points (bps) to 0.598%, while stocks in China marks mild losses by the press time.
Looking forward, investors will keep eyes on virus updates for fresh impulse ahead of the US session whereas in the ISM Non-Manufacturing PMI is likely to take the seat of monthly employment data. The reason could be traced from the survey dates and their proximity to the coronavirus (COVID-19) outbreak in the US.
Technical analysis
Buyers will have to justify their strength by clearing 7.1425/30 area, comprising highs marked since March 25, 2020, else a pullback to 21-day SMA level of 7.06000 can’t be ruled out.