DXY Index back above 90, China to slow down CNY’s rise against USD

USD gained last Friday on positive job data. Initial jobless claims fell to 385k, which was the first time below 400k since the start of the pandemic. Moreover, ISM’s service index rose from 62.7 in April to 64 in May. However, non-farm payrolls missed the forecast and landed at 559k. The forecast was expecting 650k jobs to be added in May. The data are still overall promising, pushing DXY Index back to the 90 level, currently at 90.12.

China is likely to slow down yuan’s appreciation against dollar to deter speculators and help its exports. CNY has risen almost 12% against USD since May 2020, backed by China’s economic recovery and USD’s weakening. Moreover, foreign funds keep flowing into yuan-denominated bonds and stocks. Recently, Beijing has issued a number of official statements warning against speculating yuan and more measures will likely be taken as well.