USD/CNH declines below 6.94 on upbeat Caixin Manufacturing PMI data

• USD/CNH has dropped firmly below 6.94 on higher-than-anticipated Caixin Manufacturing PMI data.
• The IHS Markit has reported the Caixin Manufacturing PMI data at 51.6, higher than the expectations of 50.2.
• Investors’ risk appetite has improved marginally after upbeat China data.

The USD/CNH pair has sensed sheer selling pressure after the release of the upbeat Caixin Manufacturing PMI data. The asset has slipped below 6.9400 and is expected to deliver more losses as the US Dollar Index (DXY) has also displayed correction after kissing a high of 104.60.

The IHS Markit has reported the Caixin Manufacturing PMI data at 51.6, higher than the expectations of 50.2 and the former release of 49.2. The upbeat PMI data has infused confidence among the market participants that the Chinese economy is effectively on the path of economic recovery after a long lockdown period.

Apart from that, China’s National Bureau of Statistics (NBS) Manufacturing PMI (Feb) has landed higher at 52.6 vs. the consensus of 50.5 and the prior release of 50.1. The Services Manufacturing PMI has exploded to 56.3 against 54.4 released in January while the street was anticipating a downbeat figure at 49.7.

Upbeat China’s economic activity data has improved the risk appetite of the market participants. S&P500 futures have trimmed half of the losses reported in the Asian session. The US Dollar Index (DXY) has corrected to near 104.55 and is likely to remain on tenterhooks ahead of the release of the United States ISM Manufacturing PMI data. As per the projections, the economic data is seen at 48.0 from the former release of 47.4. Apart from that, the New Orders Index that conveys forward demand is expected to rebound to 43.7 from the prior figure of 42.5.