The USD/CNY price was in a tight range in early trading as investors reflected on the mixed manufacturing data from China. The pair is trading at 6.4040, which is about 0.45% above the lowest level in October.
China manufacturing data
The manufacturing sector in China plays a major role. Besides, the country is the biggest manufacturer of most items like furniture and smartphones. It is also one of the biggest employers in the country.
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Data published on Sunday and Monday painted a different picture about the sector. According to the National Bureau of Statistics (NBS), the country’s manufacturing PMI declined to 49.2 in October. This was the second month in a row that the PMI has been below the expansion zone of 50.
And on Monday, data by Caixin showed that the manufacturing PMI rose slightly in October. It moved from 50.0 in September to 50.6 in October. This increase was better than the median estimate of 50.0.
Still, the overall picture is that the country’s economy is struggling. There are several reasons for this. First, there have been jitters about the country’s real estate sector after Beijing started to intervene. The actions led to the near-collapse of Evergrande Group and several other real estate companies. As such, the sector has seen substantial slowdown recently as banks avoid the sector.
Second, there are energy challenges in the country. In the recent past, the sector has struggled as the price of natural gas and coal have jumped. Indeed, in some provinces, companies have been ordered to reduce their power consumption during peak hours.
Third, globally, there is an ongoing major shipping crisis, which has led to a higher cost of doing business. Still, there is a likelihood that the situation will improve in the coming months.
USD/CNY technical analysis
The daily chart shows that the USD/CNY price has been under intense pressure in the past few weeks. It has declined by almost 2% from its highest level in September. At the same time, it has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved from the oversold level. Therefore, the pair will likely remain in this range in the near term as investors wait for the upcoming Federal Reserve decision and US non-farm payrolls (NFP) data.
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