The USD/CNY pair is holding steady as traders respond to PMI data from China’s manufacturing industry.
According to Markit, the Chinese manufacturing PMI rose from 53.0 to 53.6.
Business confidence rose to its highest level since 2014.
The USD/CNY price has hardly changed today as traders respond to the impressive manufacturing data from China. The pair is trading at 6.6845, up several pips from its lowest level since April 2019.
Chinese Yuan Stable
Production activity in China recovers
China, the first country where coronavirus disease appeared, has made great progress this year. After shrinking in the first quarter, the country recovered in the second and third quarters by 3.2% and 4.9% respectively.
It now appears that the same pace of expansion will continue in the fourth quarter. On Saturday, data from the National Statistics Office showed that the manufacturing PMI fell from 51.5 to 51.4 in October. However, as the PMI is above 50, this is a sign that the country is on a recovery path. In addition, the PMI has been above 51 since July, which is a sign of strength.
Earlier today, the Caixin and Markit data was even better. The data showed that the manufacturing PMI rose from 53.0 in September to 53.8 in October. This was a better figure than the 53.0 that the analysts surveyed by Reuters had expected.
The report cited the improvement in the increase in new work as companies continued to receive new orders from domestic and international buyers. This increase resulted in companies expanding production at the fastest pace in nearly a decade.
The PMI rose due to the greater influx of labor, increased business activity by manufacturers, lower costs and rising business confidence. In fact, business confidence rose to its highest level since 2014, the report said:
“Recovery was the word in the current macroeconomy, with the domestic epidemic under control. Supply and demand in manufacturing improved simultaneously. Companies were very willing to increase their inventories. Prices tended to be stable. Business operations improved and entrepreneurs were confident”.
Meanwhile, USD/CNY traders are also focusing on the upcoming elections in the United States. Recent polls show that Joe Biden has the upper hand in the final days of the election. If he wins, there may be a chance that relations between the two largest economies in the world will improve.
USD/CNY technical outlook
USD/CNY technical table
On the daily chart, we can see that the USD/CNY pair has been in a steady downtrend since May when it reached a high of 7.1686. Last week it hit a low of 6.6400. 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 a downtrend as bears seek the next support at 6.6200. Become a better trader with our free Forex trading courses.