USD/CNH remains sidelined after refreshing intraday low, drops to one-week low during three-day downtrend.
China Caixin Manufacturing PMI drops to 49.5 versus 50.3 expected and 50.0 prior.
Fed fails to impress hawks despite marching market forecasts of 0.25% rate hike.
US NFP, risk catalysts eyed for clear directions.

USD/CNH prods a three-day downtrend as it seesaws around 6.9000, refreshing the weekly low near 6.8992 at the latest, after witnessing a negative surprise from China activity data on early Thursday. It’s worth noting that the Federal Reserve’s (Fed) dovish hike favors the offshore Chinese Yuan (CNH) pair bears as traders return after a long weekend.

China’s Caixin Manufacturing PMI for April drops to 49.5 versus 50.3 expected and 50.0 prior. Earlier in the week, the NBS Manufacturing PMI for the dragon nation offered a negative surprise before the Chinese markets went on a long holiday until Thursday.

Even so, the US Federal Reserve’s (Fed) failure to convince the US Dollar buyers despite increasing the benchmark rates to the highest levels since 2007 seems to keep the USD/CNH bears hopeful. That said, Fed Chairman Jerome Powell also appeared positive while ruling out fears of a banking rout. However, a dropping of the lines in the statement suggesting the need for further rate hikes gained major attention and weighed on the US Dollar despite the hawkish move by the Fed.

Not only the Fed but the US data were also impressive but couldn’t please the greenback of late. On Thursday, US ADP Employment Change rose to 296K for April from 142K prior versus 148K market forecast. Additionally, the annual pay growth declined to 13.2% from 14.2%. Further, ISM Services PMI improved to 51.9 in April versus 51.8 market forecasts and 51.2 previous readings. It’s worth noting, however, that the S&P Global Services PMI and Composite PMI for April eased to 53.6 and 53.4 versus 53.7 and 53.5 respective priors.

It’s worth mentioning, however, that the greenback’s weakness could be linked to the growing banking turmoil in the United States and looming fears of the debt ceiling expiration. Recently, PacWest Bancorp teased an asset sale and propelled the market’s banking woes while the White House statements suggesting debt limit default could cost 8.3 million job losses weigh on the sentiment.

Amid these plays, S&P 500 Futures print mild losses by tracking the Wall Street benchmarks. It should be observed that holidays in Japan restrict bond market moves in Asia.

Having witnessed the initial reaction to the Fed moves and China data, USD/CNH pair traders should pay attention to the risk catalysts as the latest risk-off mood seem to put a floor under the US Dollar. Additionally important will be the second-tier US data ahead of Friday’s NFP.

Technical analysis

A convergence of the 21-DMA and 50-DMA, near 6.9040-30, restricts the immediate downside of the USD/CNH pair. It’s worth noting, however, that the downbeat oscillators keep favoring the sellers.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.