USD/CNH nears 10-day high to 6.9800 as coronavirus holds the driver’s seat

USD/CNH consolidates the recent gains to 0.6815, stepping back from the four-week high of 6.9899, during the early Tuesday’s trading session. The fears of China’s coronavirus outbreak propel the pair’s recent rally despite the Lunar New Year holidays in Beijing.

With more than 100 deaths and +4,300 confirmations from across the globe, the coronavirus renews the fears of Severe Acute Respiratory Syndrome (SARS) virus that resulted in 774 deaths in 26 countries during 2002/03.

The US and Canada have already issued travel alerts whereas Germany recently registered its first case.

Chinese authorities have extended the Lunar New year break from January 30 to February 02 with no clear directions for the schools/colleges to resume. The diplomats have also downed its tourism websites while banned inter-city travels to/from the major affected areas.

Also positively supporting the pair are the recently published data from the US, including Monday’s Dallas Fed Manufacturing Business Index, which increases the optimism at the Fed.

The contagion has severally challenged global trade sentiment while dragging the US 10-year treasury yields and Wall Street benchmarks down.

Investors await fresh clues of any action plan to stop/cure the epidemic in order to renew the Chinese currency.

Technical Analysis

Buyers will wait for sustained trading beyond 7.000 mark to take aim at 100-day SMA near 7.0280.