USD/CNH: Nears two-week high as China tries everything to placate traders
- USD/CNH fails to hold onto previous gains.
- The mixed direction of coronavirus numbers keeps traders on their toe.
- Upbeat comments from China’s Xi and WHO’s urge to not panic recently grabbed market attention.
- China does it all to stay positive, eyes on the US data, coronavirus headlines for fresh impulse.
USD/CNH remains mildly positive around 7.0120 as China’s markets open for Wednesday’s trading. While coronavirus indicators and efforts to placate traders earlier portrayed risk reset, Beijing’s efforts to ignore the negative impacts of the deadly virus seems to keep the buyers happy off-late.
Despite Moody’s downgrade to China’s economic forecast, from 5.8% previous expectations to 5.2%, China’s President Xi Jinping said, “China can meet its economic growth target in 2020 despite the impact of the coronavirus outbreak.”
In addition to being optimistic, China is trying it all to placate traders. Be it extra tariffs on the US goods or heavy liquidity infusion, not to forget signals to take measures to boost foreign investment, diplomats in Beijing are doing their best to avoid widespread economic contagion of the deadly disease.
Also trying to tame the fears were the World Health Organization (WHO) that praised China for taking drastic measures to contain the virus and urged calm as the death toll crossed 2,000 mark.
Numbers from mainland China and the epicenter Hubei both confirm the increase in death contrasting a sustained weakness in the numbers of infected cases.
While portraying the trade sentiment, the US 10-year treasury yields consolidate losses to 1.563% whereas stocks in China also turn modestly positive by the press time.
Given the lack of catalysts on the economic calendar, traders will follow clues from China for near-term direction.
Technical Analysis
Considering the sustained break of a descending trend line from December 2019, at 7.0080 now, the monthly top surrounding 7.0230 is likely to return to the charts.