Daily brief: USD/CNH upside eases ahead of Chinese economic data

Wednesday’s Asia-Pacific outlook

Asia-Pacific markets look poised to open higher today after US stocks rallied into the close as traders brushed aside turmoil in the cryptocurrency market. The Dow Jones Industrial Average rose 1.02%, the US dollar DXY Index fell around 0.5%, and Treasury yields fell.

Bitcoin prices fell over 12% after the crypto exchange FTX agreed with Binance to acquire the company amidst a liquidity crunch. The announcement came from Binance’s chief executive, Changpeng Zhao, who earlier stated that his company would see its remaining FTT coins.

The US midterm election is underway, and results should be in tomorrow. Republicans are expected to make gains in Congress, which would likely deadlock Democrats and limit their spending. That would be positive for the Treasury market. Disney fell over 6% in after-hours trading after the company’s third-quarter results missed on revenue and earnings estimates, although its streaming segment beat on subscriber growth.

Adrian Orr, the Reserve Bank of New Zealand Governor, will serve another five-year term starting in March 2023. The central bank’s board approved the appointment this week. NZD/USD is trading at four-week highs just below the 0.6 level. Electronic retail card spending in New Zealand rose 1.0% m/m in October, down from 1.4% in September.

China’s consumer price index (CPI) and producer price index (PPI) are due at 01:30 UTC. The October CPI is expected to cross the wires at 2.4% from a year ago, down from 2.8% the month prior. The consensus estimate for factory gate prices (PPI) was at -1.5% y/y, down from 0.9% y/y in September. The results may move the Chinese yuan and Australian dollar.

Elsewhere, gold and silver advanced +2% against the softer USD and yields. Platinum rose to the highest since early June, nearing the 1,000 level. Copper resumed a technical breakout, and iron ore prices in Singapore extended gains. Coffee futures plummeted after a positive crop outlook for Brazil’s 2023 season improved the supply outlook. US natural gas prices fell as Storm Nicole approaches Florida.

Notable Events for November 09:

• Japan – Bank Lending (Oct)
• Australia – Building Permits Final (Sept)
• Indonesia – Retail Sales (Sept)

Chinese yuan technical outlook

USD/CNH climbed above the 26-day Exponential Moving Average (EMA), but prices failed to hold intraday gains above the 23.6% Fibonacci retracement. For now, the uptrend from the May swing high remains intact. A drop below the supportive 38.2% Fib may derail the currency pair’s uptrend.

USD/CNH daily chart

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