USD CNH Forex Analysis - Baxia Markets

USDCNH -0.92%

The US dollar is losing ground to some currency pairs after the US 10-year treasury Note spiked in the previous trading session. The Chinese Yuan recovered 2.44% after reaching a 14-year high yesterday.

The US released Initial Jobless claims this morning, and the result came out at 193K, a better than the expected figure by 22K; analysts anticipated a 215K. The figure is not only better than expected but also better than the previous release, which strengthened the USD against four of the six major currency pairs.

China will release NBS Non-Manufacturing PMI at an early stage of the new trading session. Analysts expect the figure to come out at 52.8, while the previous was 52.6. We could see a minimal improvement, but it is more important that the figure stays above the 50 level, which indicates industry expansion, the release of this economic indicator will create more volatility in the exchange rate of the Chinese Yuan against other currencies, mainly against the USD.

China will also release NBS Manufacturing PMI, which is expected to come out at 49.6 from a previous 49.4. Although we could see the figure improve slightly, if it stays under 50, market participants will interpret it as an industry contraction and are likely to take action.

The USD Index is 17% up this year, and we see very solid numbers in the labor market despite the Fed's efforts to slow down economic growth. It could be hard to beat the dollar this year. Currently, the US stock market negatively correlates with the US dollar.

This publication does not provide financial advice for traders, and its only purpose is education. Use all the available information from different analysts and develop your own trading strategy. Trading forex and cryptocurrencies is not for everyone. You should only trade with money you can afford to lose. Past performance does not indicate future results.

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USDCNH is on a 6-day winning streak

The United States will release a series of high-impact economic indicators related to inflation and the labor market during the trading session, which will bring high volatility to major Forex pairs.

The US will release: Consumer Price Index, which is expected to increase from 296.171 to 296.43; a higher figure will be positive for the USD as it suggests high economic activity. They will also release the Inflation Rate YoY, which is expected to drop from 8.3% to 8.1%; higher inflation will be bullish for the USD but will negatively impact the US Stock market.

The US Initial Jobless Claims indicator is expected to increase from 219K to 225K for the first week of October, suggesting that the labor market is finally giving in; however, we have seen surprisingly good numbers for the labor market in recent weeks.

Later in the trading session, China will release the Inflation Rate YoY, which is expected to increase from 2.5% to 2.8%; a higher rate will be positive for the Yuan exchange rate against other currencies.

China will also release the Balance of Trade for September; analysts anticipate an increase from $79.39B to $81B. China is a prominent exporter and has maintained a surplus since 1995; a higher figure than expected will be positive for the Yuan.

USDCNH is on a six-day winning streak; the general trend continues to be upward as the pair is currently trading above the short and long-term moving averages. Our parabolic SAR indicator strengthens the long signals.

The Bollinger bands are still wide and moving upwards, which suggests there will be high volatility and that the pair will continue moving upwards; however, the bands are starting to shrink, which indicates that the pair might enter a consolidation phase in the medium term.

The relative strength index is at 64%, allowing the pair to continue climbing a bit before entering an overbought status. If this happens, there might be a temporary change in the market sentiment.

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And read more useful trading insights at https://news.baxiamarkets.com/

This publication does not provide financial advice for traders, and its only purpose is education. Use all the available information from different analysts and develop your own trading strategy. Trading forex and cryptocurrencies is not for everyone. You should only trade with money you can afford to lose. Past performance does not indicate future results.