- The USD/CNY pair is holding steady as traders react to the Chinese manufacturing PMI data.
- According to Markit, the Chinese manufacturing PMI rose from 53.0 to 53.6.
- Business confidence rose to the highest level since 2014.
The USD/CNY price is little changed today as traders react to the impressive manufacturing data from China. The pair is trading at 6.6845, which is a few pips above the lowest level since April 2019.
China manufacturing activity rebounds
China, the first country to have the coronavirus disease, has made strong strides this year. After contracting in the first quarter, the country recovered by 3.2% and 4.9% in the second and third quarters, respectively.
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Now, it seems that the same expansion pace is going on in the fourth quarter. On Saturday, data from the National Bureau of Statistics showed that the manufacturing PMI dropped to 51.4 in October, from the previous 51.5. Still, with the PMI being above 50, it is a sign that the country is in a recovery path. Also, the PMI has been above 51 since July, which is a sign of strength.
Earlier today, data from Caixin and Markit was even better. The data showed that the manufacturing PMI rose from 53.0 in September to 53.8 in October. That was a better reading than the 53.0 that analysts polled by Reuters were expecting.
The report cited the improvement to rising new work as companies continued receiving new orders from domestic and international buyers. This increase led firms to expand their output at the fastest pace in almost a decade.
The PMI rose because of greater inflows for work, higher business activities by manufacturers, lower costs, and rising business confidence. Indeed, business confidence rose to the highest level since 2014. The report said:
“Recovery was the word in the current macro economy, with the domestic epidemic under control. Manufacturing supply and demand improved at the same time. Enterprises were very willing to increase inventories. Prices tended to be stable. Business operations improved, and entrepreneurs were confident.”
Meanwhile, USD/CNY traders are also focused on the upcoming election in the United States. Recent polls show that Joe Biden has an upper hand in the final days of the election. If he wins, there could be chances of improved relations between the two biggest economies in the world.
USD/CNY technical outlook
On the daily chart, we see that the USD/CNY pair has been in a steady downward trend since May, when it reached a high of 7.1686. It reached a low of 6.6400 last week. The price remains below the 15-day and 25-day exponential moving averages. The awesome oscillator is also below the neutral line. Therefore, the price will remain in the descending trend as bears aim for the next support at 6.6200. Become a better trader with our free forex trading courses.