The USDCNH is mildly lower on the day on a Reuters report which says that more than 300 firms in China are seeking up to 57.4 billion yuan ($8.2 billion) in bank loans to assist them stave off the negative economic impact to their businesses exerted by the coronavirus outbreak.
According to Reuters reports on Monday which cited two banking sources close to the situation, some of the companies that have requested for this assistance include notable names such as Didi Chuxing Technology Co, Qihoo 360 Technology Co and top Chinese smartphone maker Xiaomi Corp.
Flight cancellations, visa restrictions to Chinese nationals as well as a broadening quarantine have hit manufacturing businesses in China very hard. Many foreign companies have also closed their Chinese operations amid a rising death toll from the coronavirus which has not only topped that of the SARS outbreak of 2002, but has achieved this in a much shorter time frame.
The USDCNH is trading mildly lower today, finding resistance at the upper border of the descending channel which has halted further upside on the pair. Barring any impact on price from coronavirus-related news, I expect the USDCNH to start returning to the opposing border of the channel. This will bring it into contention with the 23.6% Fibonacci retracement level at 6.9658. A breach of this level to the downside brings the 38.2% Fibonacci retracement level of 6.82757 into focus, which is where the lower border of the descending channel is located. A breakdown of the channel’s lower border opens the door towards the 50% Fibonacci retracement level at 6.71577.
On the flip side, a break of the channel’s upper border continues the depreciation of the Yuan and brings into focus, the 12th August and 14th October 2019 highs at 7.1000, with the two-year high of 7.19590 lurking in the distance.