USDCNH Analysis – January-11-2024

USDCNH Analysis - January-11-2024

The USDCNH currency pair is gaining ground, now approaching 7.16 per dollar. This upward movement is a recovery from its lowest point in four weeks. This change coincides with the dollar’s weakening as everyone anticipates the upcoming US inflation report. This report is crucial because it could reveal what the Federal Reserve plans to do next.

Even with a strong job market, market players predict that if inflation in the US slows down, the Federal Reserve might reduce interest rates this year. However, for the week, the value of the yuan has decreased. This decline is due to investors’ expectations that China will need to relax its economic policies further to boost growth.

China’s economy, the second-largest globally, is facing challenges. It’s struggling with decreasing prices (deflation) and a shaky recovery from the pandemic. Financial markets expect that China will lower key lending rates. They also anticipate a reduction in the reserve requirement ratio in the first half of this year.

As investors and analysts look forward, they’re particularly interested in China’s trade and inflation data this week. They are also keenly waiting for the GDP data for the fourth quarter, which will be released next week. This data will provide fresh insights into the state of the Chinese economy.

USDCNH Analysis - January-11-2024

USDCNH Analysis 4-Hour Chart