The U.S. dollar is trying to recover from the recent strength in the Chinese Yuan, which sees the pair at 6.7900. The Chinese currency has strengthened 5% versus the greenback since May 27th due to the disparity in the economic recovery of both nations.
An economic adviser to Presidential Candidate Joe Biden has said that trying to “fully decouple” from China was unrealistic. In a statement to the Chamber of Commerce Tony Blinken said that Biden would Biden would focus on growing U.S. strategic influence by rebuilding ties with allies, but Trump has been critical of the closeness of Biden’s ties with China in the past. Blinker’s comments were a shot at President Trump’s recent goal for the U.S. economy being able to dislodge itself from Chinese manufacturing and technology ties.
The differing strategies of both candidates are causing some uncertainty ahead of the election result. A China-U.S. trade deal is still on the table and Trump sees the Phase 1 trade deal signed with China in January as an improvement. He claims that China is buying a lot more U.S. goods than before, although trade analysts suggest the total may fall short of first-year targets.
There is just over a month until the U.S. election and the USDCNY may have seen its big move in the last few months. Some consolidation in the pair could be possible until traders get more polling information closer to the election. Some stronger U.S. economic data could help to recover further losses but with virus cases still rising there is also the risk of further economic damage.
The USDCNY bounced from the 6.7500 figure and will now look to test the 6.8500 level but weakness still persists. The 50-day moving average comes in at 6.9000 but there is still a risk of further downside in the pair and shorting a rally may be the safer option. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
