Chart of The Day USDCNH
USDCNH Probable Price Path & Potential Reversal Zone
USD: The United States may reach an economic stimulus agreement, coupled with the once-anticipated Brexit negotiations or consensus, which is good for risk-taking, and supports U.S. stocks to set a new record high. The U.S. dollar index fell below the 90 key psychological barrier and closed down 0.7% to 89.8, another record New low since April 2018; U.S. 10-year Treasury bond yield rose nearly 2 basis points to 0.933%. U.S. bipartisan congressional leaders continue to mediate the approximately $900 billion stimulus package. The White House spokesperson is optimistic that an agreement can be reached within one or two days. Republican Senate leader McConnell also believes that the agreement is close at hand, but it may continue discussions during the weekend. If the provisional appropriations bill is not passed in time for the expiration of Friday, some government departments may temporarily suspend operations. The two parties are seeking to pass the bailout plan together with the US$1.4 trillion appropriation bill that will allow the federal government to operate until September 30 next year. The number of Americans claiming unemployment benefits for the first time last week unexpectedly rose to 885,000, a three-month high. The annual rate of new housing starts in November was 1.547 million, an increase of 1.2% on a month-to-month basis, the highest in nine months. On the other hand, the US regulatory agency consultants support the approval of the vaccine developed by Modena, and the emergency use authorization will be approved by the Food and Drug Administration as soon as Friday.
CNH: The People's Bank of China launched a 10 billion RMB reverse repurchase operation, which was the same as today's maturity; this week, the net return of 90 billion RMB through reverse repurchase. The Mainland will provide financial support to key foreign-funded enterprises such as automobile manufacturing and medical equipment, including the PBOC’s 1.5 trillion yuan re-loan and rediscount policy, and the Export-Import Bank of 570 billion yuan in new loans
From a technical and trading perspective, the USDCNH printed a pivotal double top this year at the 7.2000 level and has since declined sharply throughout the second half of the year in unison with the broader USD Index. On the weekly chart price now looks poised to test a key inflection point between 6.40/43, this area represents the primary weekly trendline support and the 78.6% Fibonacci retracement of the 2018 - 2019 advance. Watch for bullish reversal patterns on the daily timeframe in this area to initiate long exposure targeting a move towards 6.67/6.70
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