The USD/CNY price slightly slipped on Wednesday after the United States posted better than expected US CB Consumer Confidence. The pair was trading at 232.51 which was around 0.1% lower than the previous day.
USD/CNY Outlook
Chinese Economic Stance
The USD/CNY pair reacted to the strong PMI data in China. China Manufacturing Purchasing Managers Index (PMI) for June came in at 50.9 which was 0.1 lower than the previous month. It slightly surpassed the 50.8 estimate forecast.
According to China Bureau of Statistics, the most prominent change in June was a slowdown in the prices of raw materials. This helped to stabilize market demand. However, market demand needs to be consolidated.
Inflation pressures that were on an upsurge in the previous months eased in June. The purchase price index took an 11.6% nosedive to 61.2% in June. The slowdown in the price growth of raw materials hampered the sales price growth of finished products.
Overall market order continued to increase steadily in June. New order index was up 0.2% from the previous month to 51.5%. It has been on an upward streak for thirteen consecutive months. The consumer goods industry recovered sooner than expected.
China non-manufacturing PMI for June declined 1.7% to 53.5%. The new order index inched 2.6% lower to 49.6%. Employment index declined 0.9% to 48%.
The rise of epidemics in some areas saw the market demand and supply fluctuate. The tightening of lockdown restrictions in some areas caused hiccups in the markets. The decline of various sectors like transportation, accommodation, and catering, led to the overall volatility in non-manufacturing industries.
US Economic Sentiment
USD/CNY edged higher on Tuesday after the release of US Consumer Confidence. According to the Conference Board, Consumer Confidence index improved in June. The index spiked to 127.3 from the previous 117.2. It largely surpassed the 119.0 estimate forecast.
The Consumer Confidence in June was the highest level since the onset of the corona virus pandemic. Short-term inflations increased albeit they had little impact on consumers’ confidence. The number of consumers planning to purchase automobiles, homes and major appliances rose.
The USD/CNY pair will react to the US ADP Nonfarm Employment Change later in the day. the employment numbers in June are expected to decline from 978,000 to 600,000.
