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August 04, 2021 @ 13:34 +03:00
China is supporting the markets’ optimism today with a firm services PMI release. The index rose to 54.9 in July, marking an acceleration after June’s failed 50.3 and alarming manufacturing activity data earlier in the week.
The dollar retreated to 6.45 Chinese yuan, an area of support since late June, thanks to a neat recovery in demand for risk assets. China caused a stir yesterday with an angry article in a state-owned newspaper about gaming services, further fuelling fears that Politburo policies were depriving China of its appeal to foreign investors. However, the article was soon removed, and local stocks saw renewed buying after a strong decline last month.
USDCNH will signal the USD bears’ strength on the drop under the support line at 6.45 and the 50 SMA. This might clear the way for a quick pullback to the more global lows at 6.35 and further at 6.25 if the Fed continues to demonstrate its slowness in winding down the stimulus.
The FxPro Analyst Team