USD/CNY Overview & Technical Analysiss
The BLS report on Friday shows figures that are worse than forecast. In August, total nonfarm payroll employment increased by 315,000, while the unemployment rate rose to 3.7%. A rate that is higher than expected should be interpreted as negative/bearish for the USD. Also, The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) rose from 49.9 to 54.2 in August, exceeding market forecasts. The Manufacturing Purchasing Managers' Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. Furthermore, according to payroll processor ADP, private sector hiring slowed in August due to a cooling of the labor market. As part of a revamped monthly report, the company said that private payrolls rose by 132,000 during the month, far below the consensus forecast of 300,000.
Caixin's manufacturing PMI for August was down from 50.4 to 49.5, below market expectations. The Caixin China General Manufacturing Purchasing Managers' Index (PMI) is the first monthly measure of Chinese economic strength. Additionally, to achieve maximum employment and inflation in the target range, the People's Bank of China (PBoC) cut its one-year benchmark Loan Prime Rate (LPR) to 3.65% from 3.7%. Moreover, according to the most recent economic data from China's National Bureau of Statistics, the urban jobless rate decreased to 5.4% in April, which was better than the 5.5% predicted.
Given the current balance of positive and negative influences affecting the USD/CNY and as long as the Fed maintains its aggressive policy and cyclical worries put pressure on risky assets, the fundamental outlook for the USD is "BEARISH" and for the CNY is "NEUTRAL".
When trying to optimize the timing of an investment, it's critical to analyze whether the pair looks overbought or oversold, and in which direction the momentum is moving. The CNY/USD pair is now priced above its 5-day, but below its 50n-day and 200-day moving average, while its MACD (moving average convergence divergence) indicates that the pair's price movement momentum is weakening. Historically, this is a positive setup in the near-term. The CNY/USD pair is trading near it's 12-month low, which signals it struggle to keep above it support price. Meanwhile, looking at the Stochastic Oscillator and RSI (relative strength index), The CNY/USD pair strongly signals being oversold. Overall, these technical indicators signal negative momentum.