USD/CNH: Firm near eight-day top after China’s briefing on corona virus

USD/CNH remains strong around 6.9130, highest since January 10, during the initial trading session on Wednesday. The pair recently benefited from the growing fears of the coronavirus.

Read: China National Health Commission’s Li: 440 confirmed cases as of end-Jan 21 in 13 provinces

China’s Global Times earlier report that the Wuhancorona virus is likely to be mutated, and the Wuhanpneumonia epidemic is at risk of further spread, has been reported in China's health commission.

Following the death of nine people due to the human transmitted virus, markets fear the return of Severe Acute Respiratory Syndrome (SARS) virus that resulted in 774 deaths in 26 countries during 2002/03.

The same triggered risk-off moves on Tuesday. Also supporting the risk aversion was the US President Donald Trump’s impeachment hearing as well as the International Monetary Fund’s (IMF) downward revision to the global growth forecast.

Further strengthening the pair could be Moody’s analysis that China's shift into the current account deficit could weigh on the sovereign's credit profile. Additionally, a lack of trade-deal positive news is also a likely reason for the quote’s latest run-up.

In doing so, traders ignored calls from the Ex-People’s Bank of China (PBOC) Governor, Min Zhu, who expects China well placed for growth in 2020.

While trade/political headlines and risk catalysts are here to keep directing the pair’s near-term moves, the US second-tier data concerning manufacturing and housing will be in focus during the latter part of the day.

Technical Analysis

Unless providing a daily closing beyond a seven-week-old descending trend line, at 6.9200 now, USD/CNH prices are less likely to revisit the monthly high near 6.9780. On the downside, 6.8740 and 6.8455 can entertain bears during the fresh declines.