USD/CNH holds to recovery gains following China’s welcome inflation numbers

• USD/CNH benefits from the recently upbeat China inflation data, extends the previous day’s pullback.
• China’s November month CPI and PPI both registered upbeat outcome.

USD/CNH rises to 7.370 amid early Tuesday trading. That said, the quote recently benefited from China’s headlines inflation data.

China’s Consumer Price Index (CPI) rose above 4.2% YoY forecast to 4.5% with a monthly data crossing 0.1% expected to 0.4%. Additionally, the Producer Price Index (PPI) also recovered more than -1.5% expected to -1.4%. With this, the pair extended Monday’s recovery despite no major positive trade headlines.

Read details: China CPI a touch hotter than expected 4.5% vs 4.2% exp YoY

On Monday, the quote took advantage of the broad US dollar (USD) pullback and the first uptick in import numbers while also ignoring the downbeat export data released over the weekend.

The United States (US) is scheduled to levy fresh tariffs on Chinese goods and markets across the globe are worried about the same. Neither the US not China registered any strong developments as far as the phase-one talks are concerned. The US President Donald Trump holds his pledge to go on with tariffs in absence of phase-one while the recent comments from the US Agricultural Secretary seem to placate the trade war fears.

Even so, the US 10-year treasury yields remain on the back foot around 1.82% while S&P 500 Futures takes rounds to 3,135 after Wall Street registered losses.

Investors will now keep eyes on trade/political headlines for fresh impulse amid a lack of major data at home.

Technical Analysis

The present recovery can take aim at 7.0535/50 area including 50-day Simple Moving Average (SMA) and November 21 top whereas a three-week-old rising trend line near 7.0200 offers immediate key support.