Chinese Manufacturing Exceeds Expectations in November. Image source: traimak © 123RF.com
Early this morning, the Official Chinese NBS Manufacturing PMI index was revised for November. According to the findings of the report, manufacturing rose by 52.1 index points from October's 51.4.
The recorded performance outstripped the preliminary market forecasts, which were anticipating output to remain virtually flat on a month over month basis, with a more moderate growth of just 51.6 index points.
Chinese Manufacturing PMI. Image source: TradingEconomics.com
China's economy was the first to suffer from the coronavirus epidemic, and also the first to generate a sizable rebound from February's downturn. In doing so, China continues to represent a critical benchmark for the global economy in combating the coronavirus fallout.
It remains to be seen whether the worsening weather in the northern hemisphere is going to roil this process of stabilisation if China undergoes through another major, epidemic wave. Meanwhile, vaccine optimism continues to relieve the pressure of global markets, as more and more traders and investors weigh in on a worldwide distribution of a viable vaccine within months.
Today's manufacturing data in China bolstered this sweeping investors' enthusiasm even more, with the Yuan's ongoing advance against the US dollar being positively affected. The greenback continues to suffer under the weight of these changing market dynamics.
As can be seen on the weekly chart below, the USDCNY has formed a very noticeable Markdown, as per our expectations, since the last time the pair was examined. The impact of the underlying Wyckoff cycle remains very pronounced, which is why the price action is likely to continue heading towards the upper boundary of the last Accumulation range (the major support level at 6.4700).
These expectations are substantiated by the fact that the underlying momentum continues to be decidedly bearish, as demonstrated by the MACD indicator. Nevertheless, the likelihood of a possible bullish correction should not be completely ruled out.
One such retracement could reach the major support (currently serving as a resistance) level at 6.7000. Short-term bullish momentum could be reinstated for the greenback towards the end of this week on the expectations for a robust Non-Farm Payrolls data.
USDCNY 1W Price Chart. Image source: Trendsharks ©, created with TradingView.com
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