USDCNH: We remain long and target 7.2250 - TDS

Analyst at TD Securities offered their take on the Chinese Yuan, which spiked beyond the key 7.00 psychological mark against its American counterpart during the Asian session this Monday.

Key quotes:

“In what appears to be a significant escalation of the ongoing US-China trade spat, USDCNH spiked to an intraday peak of 7.1114 amid press reports that the Chinese government has instructed state buyers to halt purchases of US Agricultural Imports. This comes after the CNY fixing came in at 6.9925, its highest level since last December.”
 
“Elsewhere, the Caixin services PMI slid to 51.6 against consensus expectations for an unchanged reading of 52.0. Within this, the new orders component rose to 51.8 from 51.2 in June, while the employment sub-index also ticked up to 50.6 vs 50.2 in the previous report.”
 
“The week is opening on a very shaky footing as USDCNH has spiked clearly above the psychologically-key 7.00 threshold. The pair now looks significantly overbought on the daily RSI, but we think momentum and continued political tensions will carry it higher in the days ahead. We remain long and target 7.2250.”