Chinese Yuan Makes Some Gains But Set For Weekly Loss Against US Dollar
Arslan Butt • 1 min read
The Chinese yuan is recovering some of its strength against the US dollar on Friday but is all set to post a decline in value for the seventh consecutive week. At the time of writing, USD/CNH is trading around 6.56.
Even though the prospects of economic recovery in China have improved recently, the US economy is also set to post a faster than expected recovery from the coronavirus crisis on the back of multiple rounds of stimulus and a strong COVID-19 vaccine rollout program. This sentiment has driven US Treasury yields and the dollar higher, which in turn is exerting pressure on the Chinese yuan.
Despite thin trading volumes owing to the Easter holiday weekend in some markets, USD/CNH could experience some volatility later in the day on the release of March’s NFP report which will provide insight into the state of the US labor market. Traders are widely expecting a strong jump in the number of jobs but a disappointing number could drive bearishness in the currency pair.
Earlier today, the PBOC set the official midpoint rate of the Chinese yuan at 6.5649 against the US dollar, 0.1% lower than the Thursday’s rate. The yuan is exhibiting signs of weakness as markets focus on the US dollar and developments in the US economy lately, with the dollar index DXY set to post its third consecutive weekly gain.