- The USD/CNY is down slightly as traders react to the latest vaccine news.
- Pfizer said its vaccine was 90% effective while FDA cleared Eli Lilly’s antibody.
- Data from China showed that the annual rate of inflation tumbled to a 11-year low.
The USD/CNY price is down by 0.25% as traders react to the overall weaker dollar and China’s weak inflation data. It is trading at 6.6118, which is slightly higher than yesterday’s low of 6.5622.
US dollar falls on vaccine hopes
The US dollar declined against peer currencies as traders reacted to the latest Covid-19 vaccine news. In a statement yesterday, Pfizer, a leading pharmaceutical company, said that its vaccine was 90% effective. That pushed global stocks sharply higher and safe assets like the US dollar and Japanese yen lower.
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Analysts and investors believe that a vaccine will help reduce infections in most countries, which will eliminate the risk of a long period of slow growth. This is particularly important now that most countries, including the US and those in Europe, are seeing an uptick of cases.
In another positive statement, the Federal Drug Administration (FDA) cleared way for use of an antibody developed by Eli Lilly. The antibody works by mimicking the body’s natural defenses against the virus.
Meanwhile, the dollar is also weakening because the risks posed by the US election have partially been eliminated.
China inflation falls
The USD/CNY is also reacting to the latest inflation data from China. According to the country’s statistics office, the official consumer price index declined by 0.3% in October, leading to an annualised growth of 0.5%. In the previous month, the month-on-month (MoM) and year-on-year (YoY) CPI had grown by 0.2% and 1.7%, respectively. The CPI was the lowest it has been in 11 years.
According to the bureau, consumer prices were impacted by low pork prices, which fell by 2.8% from a year ago. That increase was significantly lower than the 25.5% decline in September this year.
The core CPI, which excludes the volatile food and energy products remained unchanged at 0.5% in October. The inflation is therefore significantly below China’s target of 3.5%.
At the same time, the producer price index (PPI) fell by an annual rate of 2.1%, worse than the expected decline of 2.0%.
USD/CNY technical outlook
On the daily chart, we see that the USD/CNY pair has dropped by more than 8.65% since May this year. The price remains below the 50-day and 25-day moving averages. It has also formed a descending channel that is shown in green. The price is between this channel. Therefore, I suspect that the pair will continue rising as bulls aim for the upper side of the channel at 0.6700. Read our comprehensive review of the best Paypal forex brokers here.