USD/CNH eyes resistance as China industrial profits surge 15.2% amid war risks

USD/CNH faces downward pressure following stronger-than-expected Chinese industrial profit data, though geopolitical risks from the Middle East conflict are limiting yuan gains. China's National Bureau of Statistics reported industrial profits surged 15.2% year-on-year in the January–February period, a dramatic acceleration from the 0.6% growth recorded across 2025. This robust recovery signals improving demand conditions in the world's second-largest economy, which typically supports commodity-linked currencies such as AUD and NZD alongside the yuan. However, the increasingly uncertain global backdrop, with escalating Middle East tensions threatening supply chain disruptions and elevated energy costs, is tempering optimism. Rising oil prices linked to conflict risks could weigh on China's manufacturing margins going forward, potentially reversing recent gains. For traders, the data supports a cautiously constructive stance on CNH and risk-sensitive currencies like AUD/USD, but geopolitical headline risk warrants tight risk management. Near-term, markets will watch for follow-through in March PMI data and any escalation in Middle East hostilities that could shift sentiment sharply toward safe-haven flows into USD and JPY.