The USD/CNY exchange rate continued rising as the National Party Congress (NPC) event continued. It also rose after the latest China trade numbers, which showed a dramatic increase in surplus as imports plunged. The pair was trading at 6.9365, which was a few points below this year’s high of 6.9720.
China trade surplus widens
The USD to CNY forex pair is in the spotlight as China continued in Beijing. In it, there have been several important headlines. The most recent headline was on the ongoing tensions with the United States. In a statement, the country’s new foreign minister warned of conflict if the two sides don’t hit breaks.
The two countries, which account for more than 30% of the global GDP, have been feuding for a while. This year, the US shot down two spy balloons from the country. There are also tensions on Taiwan, which China wants to reunite with.
The US has also announced several export controls. In the US, most politicians use toughness against China as a campaign issue.
Meanwhile, China said that it expects that the economy will grow by 5% this year after it expanded by 3% in the previous year. This growth target is seen by many people as being relatively modest by historic standards.
China faces significant challenges. Several companies, including Foxconn have started investing in other countries like India. At the same time, the country’s economy is aging while the property sector which led the growth has shown signs of easing.
Data published by the Chinese statistics agency showed that exports declined by 6.8% in February while imports plunged by 10.2%. Therefore, the trade surplus widened to more than $116 billion in February from the previous month’s $78 billion.
The other key catalyst for the USD/CNY price will be the upcoming statement by Jerome Powell, the Federal Reserve chair. In it, he will provide hints about what to expect in the coming months as inflation remains sticky and the unemployment rate eases.
USD/CNY price forecast
The USD to CNY exchange rate has been in a slow bullish trend in the past few days. It was trading at 6.9361, which was the lowest point in December last year. The pair has also jumped sharply from last year’s low of 6.6918 and moved above the 25-day and 50-day moving averages. Therefore, the pair will likely continue rising as buyers target the key resistance at 7.00, as I wrote in this article.
Source: https://invezz.com/news/2023/03/07/usd-cny-forecast-after-the-latest-china-news-on-trade-geopolitics/