Renminbi surges following bull run on markets
July 06, 2020 @ 17:58 +03:00
The Chinese yuan has come to life today. Earlier, we noted the abnormal strengthening of the Chinese stock market, which has experienced a real rally since last week, adding 14% in just four trading sessions.
In recent weeks, some observers have noted a surge in the activity of retail investors in China, which could be a repeat of the trend we saw last quarter in the United States.
The Chinese yuan remained stable up until today, when USDCNH crashed 0.7% to 7.0140, the lows since March. This is the strongest intraday movement since December 2019.
The yuan joining the movement may mean there will be an increased interest of foreign investors to China. Regarding the rally as insight from local investors. The news driver about the strengthening of PMI indices in China is widely regarded as the information driver.
On the part of technical analysis, the short-term picture is in favour of further impulses for the renminbi. USDCNH pulls back after a second unsuccessful attempt to grow above 7.20. Traders also noted the fall of the pair below the 200-day average, which acts as a support level for the pair for the last three months. Recently, falling under this line led to a movement of 10-12 figures down before the pair found ground.
Besides, the growth impulse of the Chinese currency may support the overcoming of the psychologically crucial round level of 7.0.
A longer-term signal for a global reversal of the trend will be received only after falling below 6.85 – to the January lows.
The FxPro Analyst Team