USD/CNH turns volatile on US-China tensions, Caixin Services PMI soars

• USD/CNH is demonstrating volatile moves amid escalating tensions between the United States and China.
• Chinese spokesperson cited that the economy will take resolute and effective measures to safeguard territorial integrity.
• Caixin Services PMI has remained upbeat in March, landing higher at 57.8.

The USD/CNH pair has been displaying topsy-turvy moves in the Asian session amid elongated tensions between the United States and China over Taiwan. US House of Representatives Speaker Kevin McCarthy crossed wires, via Reuters, late Wednesday while praising talks with Taiwanese President Tsai Ing-Wen.

US McCarthy is supporting economic cooperation with Taiwan, particularly on trade and technology. He further added, “US arms sales to Taiwan must be delivered on a timely basis.” In retaliation, China has criticized the US for collusion with Taiwanese authorities and their secret attempts with separatists seeking "Taiwan independence".

Also, the Chinese Foreign Ministry spokesperson added that China will take resolute and effective measures to safeguard national sovereignty and territorial integrity.

Meanwhile, the release of the Caixin Services PMI (March) data has not been well attended amid geopolitical tensions. The economic data has landed at 57.8, higher than the consensus of 54.0 and the former release of 55.0. The release of the upbeat Services PMI would remain supportive of the Chinese Yuan.

S&P500 futures have deepened their losses as investors are turning their faces from risk-perceived assets. The US Dollar Index (DXY) is making efforts in keeping its auction above 102.00.

Going forward, more clarity on the movement of the USD Index will come after the release of the US Nonfarm Payrolls (NFP) data. Taking cues from the US Automatic Data Processing (ADP) Employment figures, it is highly likely that the fresh labor additions would remain subdued.