USD/CNH bears had reasons to cheer as....>

CHINA YUAN: USD/CNH bears had reasons to cheer as the rate sank back below the

key CNH7.0000 level into the new year, but they need to be alert to potential

hurdles ahead. The rate is testing support from the ~CNH6.8700 area, where it

formed a base through July 2019 before staging a historic jump above CNH7.0. The

61.8% retracement of the Mar 21 - Sep 3, intersecting at CNH6.8714, adds to the

importance of this region. Momentum studies suggest that the rate may be

oversold, especially that it operates under the lower 2.0% Bollinger Band.

- The bulk of the rate's slide towards the end of 2019 was driven by a growing

rapprochement in U.S.-China trade relations. But enthusiasm surrounding the much

awaited phase-one deal is already priced and the time is ripe to look further

afield. Before the ink is dry on the pact (due to be signed Wednesday), the U.S.

& China will try and proceed to phase-two talks. Based on how difficult it was

to wrap up phase one, it is reasonable to remain cautious.

- Chinese macroeconomic data, due Friday, will offer insight into the state of

domestic economy. Today's beat in trade balance saw little immediate reaction.

- See chart at: https://emedia.marketnews.com/marketnewsintl/USDCNH14012020.png