The USD/CNY price drifted upwards on Monday morning as traders waited for the upcoming China GDP data scheduled for Tuesday this week. The pair rose to a high of 6.87, which was a few points above Friday’s low of 6.8346
China GDP preview
The Chinese economy seems to be doing better than expected according to some flash economic numbers. On Monday, data revealed that the housing sector continued to recover after going through one of the worst crisis on record. New home prices jumped by 0.5% in March, the fastest growth in 21 months.
The numbers came a few days after numbers from the country revealed that exports jumped in March of this year even as companies continued moving their operation elsewhere. Sales of electric vehicles in the country have jumped as well.
Another flah report by Nomura said that energy consumption has jumped sharply in the past few weeks. It jumped by 5.9% on a year-on-year basis in March.
The next key CNY news will be the upcoming China GDP data scheduled for Tuesday morning. These numbers will show whether the economy recovered in the first quarter after the country abandoned its Covid-zero strategy.
Economists polled by Reuters expect the data to show that the country’s GDP expanded by 2.2% on a month-on-month basis after recording no expansion in the previous quarter. This growth will then translate to a year-on-year increase of 4.0%, higher than the previous 2.4%.
China is expected to do well this year after the country reopened. In a report last week, the IMF said that it expects that the economy will grow by 5.6% in 2022. That was a more optimistic report considering that authorities in Beijing have placed a target of 5.0%.
USD/CNY chart analysis
USD/CNY chart by TradingView
The daily chart shows that the USD/CNY exchange rate moved sideways on Monday morning. It has remained steady at 6.87, where it has been in the past few days. The pair is consolidating at the 50-day and 25-day exponential moving averages. It is also between the 50% and 38.2% Fibonacci Retracement levels.
Therefore, the pair will likely continue consolidating in the coming days as investors reflect on China’s and American economies. It will then have a bearish breakout as sellers target the key support at 6.820. A move above the resistance at 6.90 will invalidate the bearish view.
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