Redback Firms Albeit Spreading Covid Remains Under Scrutiny

Greenback weakness has applied some pressure to USD/CNH, which has shed 100 pips already, landing at CNH6.3843 as a result. The rate has given away more than half of yesterday's gains as we type.

• Bears would be pleased by a deeper sell-off, potentially past Jan 5 low of CNH6.3660 and towards Dec 31 low of CNH6.3379. Bulls need to reclaim yesterday's multi-week high/Nov 26 high of CNH6.3976/99 before setting their sights on the CNH6.4065-6.4104 area, which capped gains on several occasions from late Oct to mid-Nov.
• China reported 116 domestically-transmitted cases of Covid-19 today, with most found in Xi'an and Shaanxi. Shenzhen authorities announced that it will require a negative test from people trying to leave the city from Saturday.
• Some have pointed to economic blueprints for 2022 released by the local governments of Beijing and Henan on Thursday, who set themselves growth targets of "above 5%" and "7% respectively. Beijing aims at a slower growth rate than the last pre-pandemic target of 6.1% set in 2019.
• Next week's data highlights include monthly inflation report (Wednesday) and trade balance (Friday).