The US Dollar is trading at 6.58 against the Chinese Yuan today up 0.0237 (0.36%). The open rate sits at 6.5623 with a previous close of 6.5606 with a YTD return of -5.39%. The pair’s daily range is between 6.56 and 6.59 with a 52-week range fluctuating between 6.54 and 7.17.
With the success of COVID-19 vaccines produced by US companies Pfizer and Moderna, the USD is performing well causing CNY to play catch up following the signing of the world’s largest trade agreement. The US dollar is anticipated to gain traction as the vaccines provide investment opportunities for many countries such as Canada, who are eager to get in on the trading momentum with hopes that the potential widespread distribution of coronavirus vaccines in 2021 will stabilize the global economy.
USD/CNY has hit a 29-month low which is leading traders towards bullish trends when investing in the Chinese currency. The currency pair is currently trading near the red support level of 6.5674, which is just shy of the multi-month low of 6.5623 that was reached last week.
Aside from the upward trend in risky investments, “the bearish pressures around USC/CNY may have strengthened due to the Chinese central bank’s decision to raise its official yuan midpoint to the highest in nearly 29 months” according to FXStreet.
On Tuesday the Peoples Bank of China (PBOC) set the daily midpoint rate at 6.5762 per US Dollar which is the strongest influence the bank has had since June 2018. “The daily fix was raised by 289 pips or 0.43% from Monday’s midpoint rate of 6.6048.
Once China’s production-led recovery is sustained there is hope that exports will increase which will boost the Chinese economy. Following the finalized Regional Comprehensive Economic Partnership (RCEP) there is hope for CNY to gain traction in the coming weeks as global trade deals begin to take their course.
By Surina Nath