- USD/CNH keeps gains following Thursday’s bounce off the seven-day low.
- China’s efforts to placate investors, offer tariff relief to the US fail to defy coronavirus risk.
- Lunar New Year holidays could dim importance of the data but traders will still be looking for coronavirus impact.
USD/CNH stays on the front foot while rising to 6.9855 during early Friday. In doing so, the pair extends the previous day’s recovery amid risk reset. Also contributing to the quote’s move could be the traders’ wait for China trade numbers and the US jobs report for January month.
China’s efforts to please risk-takers by infusing liquidity, halving tariffs on some of the US goods seem to fail as markets remain worried about coronavirus fears. The latest sign came from the RBA Governor Philip Lowe and Japanese Economy Minister Nishimura.
While portraying the sluggish risk-tone, the US 10-year treasury yields decline to 1.63% whereas S&P 500 Futures and Asian equities also mark losses by the press time.
China’s January month trade numbers are likely to portray the trade bleak during the holiday season. Though, disappointment from data may push traders to blame coronavirus and favor additional strength of the pair.
Relating to this, analysts at TD Securities said, “While there has been some improvement in PMI components relating to trade, and easing trade tensions between the US and China, the path of improvement will be a gradual one, with another hurdle in the form of Coronavirus also likely to have a negative impact in the next month or two.”
Technical Analysis
50-day and 21-day SMA level of 6.9723 and 6.9385 offer near-term key support to the pair while 100-day SMA, at 7.0205 now, limits the quote’s immediate upside.
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