Will the CPI Crash the USD?
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The risk sentiment gets better as Chinese data improves
What?
The Chinese economic indicators have marked a positive start of today’s trading session. While the GDP growth came out in line with the forecast with a 6% increase, the level of industrial production greatly outperformed the anticipated figures, rising by 6.9% (vs. the forecast of 5.4%). Also, industrial production advanced by 5.4%. It may be a good sign about a final de-escalation of the US-China trade tensions.
The reaction
The market showed an optimistic reaction to the news, resulting in the inflow of capital into the Chinese yuan.
USD/CNH has fallen to the lowest levels since the beginning of July. On the daily chart, the pair is targeting the support at 6.8478.
USD/JPY, on the other hand, is getting positive momentum. The pair has broken higher above the 110 level and now is testing the border of the uptrend.
What’s next?
The phase one trade deal between the US and China has brought the bullish momentum to the markets. However, experts suggest that the tensions are not over yet, mentioning US tariffs on Chinese goods that remain in place. Will we see future challenges for the Chinese yuan ahead?
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