USD/CNH extends losses below 6.7000 as DXY eases from one month high
- USD/CNH keeps the previous day’s losses to stretch pullback from the highest in two weeks.
- China’s Communist Party wraps up top policy meeting by outlining plans for the nation to become greater power.
- Fears of further delay in the US stimulus package weigh on the greenback after a notable rise, risk aversion helps the US dollar.
USD/CNH drops to 6.6917, down 0.24% intraday, during the early Friday. The pair can be cited as an exception to the broad US dollar strength as it took a U-turn from the mid-month high on Thursday.
While looking for the reasons, hopes that China will not only overcome the coronavirus (COVID-19) pandemic but will also aim to become the world’s largest economy, as hinted by South China Morning Post (SCMP) could be spotted favoring the bears. “Party’s most important meeting of the year ends with the decision to focus on technological innovation as major engine of growth. The plenum also discussed plans to become a ‘great modern socialist nation’ within 15 years,” said the SCMP news.
Read: China’s Communist Party: 2020 GDP to exceed 100 trillion yuan
On the contrary, the latest clues from the US covid aid package talks suggest additional delays in rolling out the much-awaited stimulus, which in turn probed the US dollar index (DXY) near the highest in four weeks. Further, the record daily spike in the American COVID-19 infections also questions the greenback bulls.
Also read: Dollar index takes bull breather after invalidating 7-month bearish trendline
Meanwhile, S&P 500 Futures drop near 1.0% to mark the biggest weekly losses since early June whereas stocks in China trade mixed amid a light calendar and broad risk-off mood.
Given the lack of major data/events, USD/CNH traders may keep eyes on the risk catalysts for fresh impulse. Hence, the fears of further delay in the American aid package, virus woes and stimulus headlines from the rest of the globe, coupled with trade/political news concerning the US and China, will be the key to follow.
Technical analysis
A clear downside break of the one-week-old support line directs USD/CNH prices toward the monthly bottom near 6.6275. Meanwhile, a 13-day-long resistance line, at 6.7325, can probe the buyers even if they manage to cross the previous support, now resistance, line around 6.7025.