USD/CNH kisses 6.70 despite upbeat Caixin PMI, US NFP in focus

• USD/CNH has touched an intraday high of 6.7012 amid rising odds of a hawkish Fed.
• The upbeat Caixin Manufacturing PMI has failed to support the Chinese yuan.
• This week, US NFP will remain in focus, which is seen at 320k.

The USD/CNH pair is scaling sharply higher after an upside break of the consolidation formed in a range of 6.6552-6.6926 this week. The asset has displayed an initiative buying action and is heading north with stellar velocity despite upbeat Caixin Manufacturing PMI data.

The IHS Markit has reported the economic data at 48.1, higher than the forecasts and the prior print of 47 and 46 respectively. It would be justified to claim that investors had already discounted the outperformance from China’s economic data and the ‘Buy on rumor and Sell on News’ indicator is triggered now.

The dominating currency, the US dollar index (DXY) is struggling to overstep the crucial resistance of 102.00. However, the overall momentum is bullish and investors are awaiting a potential trigger that will drive the asset higher. The DXY has been strengthened as odds of an extreme tightening monetary policy announcement by the Federal Reserve (Fed) are advancing vigorously.

Mounting price pressures in the US economy are restricting the households to keep up their consumption quantities. Soaring inflation is elevating the total consumption expenditure along with keeping a lid on the volume of goods and services purchased by the households. Therefore, the inflation mess is for real and seeks an instant remedy.

This week, investors’ focus will remain on the US Nonfarm Payrolls (NFP) data, which is due on Friday. As per the market consensus, the US Labor force is flooded with 320k jobs in April against the addition of 428k jobs recorded for March.