Baxia Markets
September 30, 2022

USDCNH -0.92%

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The US dollar is losing ground to some currency pairs after the US 10-year treasury Note spiked in the previous trading session. The Chinese Yuan recovered 2.44% after reaching a 14-year high yesterday. 


The US released Initial Jobless claims this morning, and the result came out at 193K, a better than the expected figure by 22K; analysts anticipated a 215K. The figure is not only better than expected but also better than the previous release, which strengthened the USD against four of the six major currency pairs.


China will release NBS Non-Manufacturing PMI at an early stage of the new trading session. Analysts expect the figure to come out at 52.8, while the previous was 52.6. We could see a minimal improvement, but it is more important that the figure stays above the 50 level, which indicates industry expansion, the release of this economic indicator will create more volatility in the exchange rate of the Chinese Yuan against other currencies, mainly against the USD.


China will also release NBS Manufacturing PMI, which is expected to come out at 49.6 from a previous 49.4. Although we could see the figure improve slightly, if it stays under 50, market participants will interpret it as an industry contraction and are likely to take action.



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The USD Index is 17% up this year, and we see very solid numbers in the labor market despite the Fed's efforts to slow down economic growth. It could be hard to beat the dollar this year. Currently, the US stock market negatively correlates with the US dollar. 


The pair continues on a general uptrend as the short and long-term moving averages are still below the current price; the pair is retracing, but after the release of high-impact economic indicators, the dollar could resume the rally. 


The Bollinger bands are wide and continue moving upwards, suggesting that volatility will continue to be high and that the pair will likely resume the uptrend. Our Parabolic S A R indicator strengthens the long signals.


The relative strength index is recovering from an overbought status, currently at 62%. We could see the pair pull back closer to the support level at 7.061120 before the uptrend resumes. 


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