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USD/CNH hovers around 7.3125 after Chinese data
China Conference on Chamber of Commerce Consumer Confidence Index rose to 103.0 in September from the previous value of 108.7
China’s industrial profits increased by 17.2% year-on-year
U.S. core PCE price index to be watched this week
USD/CNH rose slightly to around 7.3125 in Asia on Wednesday. The Federal Reserve’s stance on raising interest rates in the longer term weakened risk sentiment and boosted the dollar against major currencies. Market participants await the release of the much-anticipated U.S. core PCE price index on Friday for fresh impetus. The index is expected to fall from an annualized rate of 4.2% to 3.9%.
The Federal Reserve decided to keep interest rates unchanged at the September meeting held last week at a range of 5.25%-5.50%. In addition, Fed officials still expect to raise interest rates further by the end of this year. Minneapolis Federal Reserve President Neel Kashkari said on Tuesday that he is among Fed policymakers who believe there will be one more interest rate hike this year. He also said U.S. interest rates may have to rise a little higher and stay there longer. The Fed’s hawkish speech boosted the dollar against the offshore yuan.
Regarding data, economic data released on Tuesday showed that the Conference Board (CB) consumer confidence index rose to 103.0 in September from 108.7 in August. The data reached its lowest level in four months, reflecting the impact of rising interest rates and political uncertainty. Building permits rose to 1.541 million in August from 1.44 million the previous month. The house price index rose to 0.8% in July from 0.4% the previous month, beating consensus expectations of 0.5%. New home sales fell to -8.7% in August from an 8% increase in July.
On the other hand, China’s industrial profits rose 17.2% year-on-year, data released by China’s National Bureau of Statistics on Wednesday showed. The data reversed a downward trend over the past five months. In addition, the People’s Bank of China (PBOC) said on Wednesday that the central bank will increase policy adjustments and implement monetary policy accurately and effectively to support economic development. Any evidence of improving Chinese data and warnings from the People’s Bank of China could cause USD/CNH to pull back and be bearish for the pair.
Looking ahead, traders will take cues from the annual U.S. second-quarter GDP report on Thursday and the core PCE price index on Friday. These may provide clear guidance for USD/CNH.
