USD/CNH: Extends recovery gains beyond 7.1050 after PBOC rate cut


  • USD/CNH takes further measures after China’s central bank took steps to combat the coronavirus (COVID-19).
  • PBOC cuts seven-day reverse repo rate, Moody’s cited weakness of China’s shadow banking industry.
  • China’s Commerce Ministry, President Xi remain optimistic.

USD/CNH remains on the front foot around 7.1080 after the People’s Bank of China (PBOC) announced a rate cut on early Monday. Earlier, comments from China’s Commerce Ministry and President Xi Jin Ping kept the normal optimistic tone whereas Moody’s cited further weakness of the domestic shadow banking industry.

Read: China cuts interest rate, injects $7 billion into banking system

In its yet another move to fight the pandemic, China’s PBOC announced 20 basis points (bps) of a rate cut to its seven-day reverse repo. With this, the Chinese central bank’s benchmark interest rate currently stands at 2.2%.

Over the weekend, China’s President Xi Jinping said that the government will adjust support policies to protect small and medium firms from the impact of coronavirus outbreak. The national leader also pushed for the active resumption of operation and production to tame the negative implications of the coronavirus (COVID-19) epidemic.

Following that, China’s Commerce Ministry also crossed wires while saying that around 80% of restaurants are open for business. It was also mentioned that nearly all major supermarkets, convenience stores, shopping malls and farm produce retail markets have reopened.

Furthermore, Moody’s said that China’s shadow banking industry continues to shrink but the nationwide leverage is set to rise further. It’s worth mentioning that China reported 31 new coronavirus cases in the Mainland as of end-march 29 versus 45 a day earlier.

Amid all this, the market’s risk-tone remains heavy with the US 10-year treasuries declining nine basis points (bps) to 0.656% whereas stocks in Asia also marking losses by the press time.

Moving on, investors now await China’s official PMI numbers for March, up for publishing tomorrow, for fresh impulse.

Technical analysis

A six-day-old falling trend line near 7.1250/55 seems to limit the pair’s immediate upside while February month high near 7.0590 can check the bears during the downside.

Additional important levels

Overview
Today last price 7.111
Today Daily Change 0.0230
Today Daily Change % 0.32%
Today daily open 7.088
 
Trends
Daily SMA20 7.0273
Daily SMA50 7.0007
Daily SMA100 6.996
Daily SMA200 7.0136
 
Levels
Previous Daily High 7.118
Previous Daily Low 7.0658
Previous Weekly High 7.1518
Previous Weekly Low 7.059
Previous Monthly High 7.0572
Previous Monthly Low 6.9572
Daily Fibonacci 38.2% 7.0981
Daily Fibonacci 61.8% 7.0858
Daily Pivot Point S1 7.0632
Daily Pivot Point S2 7.0384
Daily Pivot Point S3 7.011
Daily Pivot Point R1 7.1154
Daily Pivot Point R2 7.1428
Daily Pivot Point R3 7.1676

 

 

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