The USD/CNY exchange rate is slightly bearish as traders respond to recent vaccine news.
Pfizer said its vaccine is 90% effective while the FDA approved Eli Lilly’s antibody.
Data from China showed that the annual inflation rate has fallen to an 11-year low.
The USD/CNY price has fallen 0.25% as traders respond to the overall weaker dollar and China’s weak inflation data. It is trading at 6.6118, slightly above yesterday’s low of 6.5622.
USD/CNY Retreats after Weak Inflation Data from China
US dollar falls on vaccine hopes
The U.S. dollar fell against peer currencies as traders responded to recent news about the Covid 19 vaccine. In a statement yesterday, Pfizer, a leading pharmaceutical company, said its vaccine is 90% effective. As a result, global stocks rose sharply and safe assets such as the US dollar and Japanese yen fell.
Analysts and investors believe that a vaccine will help reduce infections in most countries, eliminating the risk of a long period of slow growth. This is especially important now that most countries, including the U.S. and Europe, are experiencing an increase in cases.
In another positive opinion, the Federal Drug Administration (FDA) cleared the way for the 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 as the risks created by the US election have been partially eliminated.
Inflation in China declines
The USD/CNY is also reacting to the latest inflation data from China. According to the country’s statistical office, the official consumer price index fell by 0.3% in October, resulting in annualized growth of 0.5%. In the previous month, the CPI had increased by 0.2% and 1.7% month-on-month (MoM) and year-on-year (YoY). The CPI was the lowest in 11 years.
According to the office, consumer prices were affected by low pork prices, which fell 2.8% year-on-year. This increase was significantly less than the 25.5% decrease in September this year.
The core consumer price index, which excludes volatile food and energy products, remained unchanged at 0.5% in October. Inflation is thus well below China’s target of 3.5%.
At the same time, the Producer Price Index (PPI) fell by an annual rate of 2.1%, which is stronger than the expected decline of 2.0%.
Technical outlook USD/CNY
USD/CNY technical table
On the daily chart, we can see that the USD/CNY has fallen more than 8.65% since May of this year. The price remains below the 50-day and 25-day moving average. It has also formed a descending range, which is shown in green. The price is between this channel. Therefore, I suspect that the pair will continue to rise as the bulls are targeting the upper side of the channel at the 0.6700 level. Read our comprehensive report on the best Paypal Forex brokers.