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USD/CNH Sitting in Tight Range as CPI and PPI Data Draws Near

September 9, 2021

Asia-Pacific trading looks set for another risk-off session on Thursday after Wall Street stocks sank and the safe-haven US Dollar rose during Wednesday’s New York session. Rising Covid-19 cases, valuation concerns, and central bank policy outlooks have investors stepping back from high-beta equities and risk-sensitive currencies. The Chinese Yuan and Australian Dollar will be in focus today, with China set to report inflation data for August.

The economic powerhouse will also report factory gate prices via the producer price index (PPI). and it is widely expected that the figure will cross wires at 9.0% on a year-over-year basis. That would be unchanged from July’s figure.

Earlier in 2021, Chinese officials authorised the release of metals, including iron ore and copper, from strategic state reserve stockpiles to help cool prices. growth concerns sank prices in recent months, which achieved China’s desired effect. The drop in copper and iron ore prices may help relieve pressure on steel producers. However, if producer prices come in over expectations today, it may renew concerns in Beijing, especially if consumer prices rise in tandem.

The Yuan is weaker versus the Dollar this week, with USD/CNH up nearly 0.50%. A Symmetrical Triangle pattern has taken shape since the currency pair put in a sharp drop from its 2021 high back in March. A break above or below resistance/support would likely lead to an extended directional move. A Golden Cross may form shortly, however, with the 50-day Simple Moving Average (SMA) tracking just below the longer-term 200-day SMA. If the SMAs intersect, it could lead to some bullish movement in prices.

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