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The USD/CNY pair declined slightly after the relatively mild Chinese manufacturing and non-manufacturing PMI data. The pair fell to 6.4533, which was slightly below Tuesday’s high of 6.4673.
China economic growth
The Chinese economy has done relatively well in the past few months. This growth has been helped by the strong local and international demand as the global economy bounces back.
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According to China Logistics, the country’s manufacturing PMI declined from 51.0 in May to 50.9 in June. This decline was relatively better than the median estimate of 50.8. This figure has been dropping after it peaked at 52.1 in November last year.
Meanwhile, the non-manufacturing PMI declined from 55.2 in May to 53.5 in June. As a result, the composite PMI declined from 54.2 to 52.9. A PMI reading of 50 and above is usually a sign that the sectors are expanding.
These numbers show that the Chinese economy is still recovering. However, the pace of this recovery has started slowing down as other countries reopen. The Caixin-Markit manufacturing PMI number will come out on Thursday. Analysts expect it to show that the manufacturing PMI declined to 51.8.
The USD/CNY is also reacting to the happenings in the United States, where economic numbers have been relatively strong. On Tuesday, data showed that the country’s house price index (HPI) rose by 14.6% in April after rising by more than 13% in the previous month. This was the fastest growth rate in more than 30 years. It provides further evidence that the housing sector is doing well, helped by the suburbs.
Later this week, the USD/CNY will react to the latest non-farm payrolls numbers that will come out on Friday. Analysts expect the data to show that the labour market continued tightening in June.
USD/CNY technical analysis
The USD/CNY pair declined by a few pips after the latest Chinese PMI data. On the four-hour chart, it is slightly below last week’s high of 6.4893. It is also at the same level as the 50-day and 25-day exponential moving averages (EMA). It also seems to be forming a bearish flag pattern. This pattern is usually a bearish signal. Therefore, there is a possibility that the pair will break out lower, with the next target being at 6.4400.
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