USD/CNH rises as China Services PMI shows mixed growth signals
USD/CNH gained 0.15% to 7.2485 following China's Caixin Services PMI release for May, which came in at 51.1, marginally above the expected 51.0 and improving from April's 50.7. While the headline figure indicates continued expansion in the services sector, underlying data revealed concerning trends with new export business contracting for the first time since December. The mixed nature of the report has weakened yuan sentiment as foreign demand pressures emerge. Input costs accelerated to a seven-month high due to rising purchasing prices and labor costs, potentially signaling future inflationary pressures. Employment showed slight improvement, breaking a two-month contraction streak. Technical resistance for USD/CNH sits at 7.2550, with support at 7.2400. Traders should monitor upcoming Chinese trade data and any PBOC policy responses to gauge further yuan direction.
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