USD/CNH corrects to near 6.7080 as odds of banning Chinese imports to the US bolsters

  • USD/CNH is struggling at around 6.7100 on mounting trade tensions between the nations.
  • The US is prohibiting imports from China’s Xinjiang region amid claims of forced labor manufacturing.
  • The DXY is consolidating as investors await the US NFP.

The USD/CNH pair has witnessed a mild correction after failing to sustain above Wednesday’s high at 6.7139. A corrective move is filled with small-bodied candlesticks, which indicates that the upside is still intact.

Mounting tensions between China and the US have put the asset on the tenterhooks. The news from Reuters, that the US authorities are ready to implement a ban on imports from China’s Xinjiang region has sidelined the market participants. The US administration has considered the option of banning imports from China after the discovery of the fact that all goods from Xinjiang are manufactured where Chinese authorities have established the detention camps for Uyghurs and other Muslim groups.

The goods are made with forced labor and the US economy denies receiving of goods manufactured with the same. Therefore, banning Chinese exports to the US looks likely till it is proven innocent.

Apart from that, the US dollar index (DXY) is oscillating in a narrow range of 102.49-102.60 in the late Tokyo session. A rebound in the risk-off impulse has improved the safe-haven’s appeal. Going forward, investors will keep an eye on the release of the US Nonfarm Payrolls (NFP). As per the market consensus, job additions in the US labor force are seen at 325k for May, significantly lower than the additions recorded in 428k.

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