• USD/CNH attempts to retrace its recent gains on the subdued US Dollar.
• Chinese CPI declined by 0.8% YoY against the expected 0.5% decline.
• Fed members’ comments suggest to keeping interest rates elevated until inflation sustainably returns to the 2% target.

USD/CNH remains in the negative territory after trimming the intraday losses on Thursday. USD/CNH pair trades lower near 7.2090 during the Asian trading hours. However, the People’s Bank of China (PBoC) set the USD/CNY central rate at 7.1063 as compared to 7.1911 Reuters estimates.

In January, the Chinese Consumer Price Index (CPI) experienced a month-on-month growth of 0.3%, which was slightly below the expected 0.4%. However, this figure represented an improvement from the previous reading of 0.1%. On an annual basis, the CPI declined by 0.8%, surpassing the anticipated decline of 0.5% and the previous decline of 0.3%. Meanwhile, the Producer Price Index (PPI) on a year-on-year basis declined by 2.5%, which was slightly lower than the expected 2.6% decline.

US Dollar (USD) faces challenges due to the risk-on sentiment despite the hawkish stance taken by the Federal Reserve (Fed) to keep interest rates higher for quite some time, which, in turn, weighs on the USD/CNH pair. In a press conference post-interest rate decision on January 31, Fed Chair Jerome Powell rejected the idea of a rate cut in March and committed to monitoring inflation to ensure its sustainable return to the 2% target