Wednesday saw USD/CNH sink through its...>

CHINA YUAN: Wednesday saw USD/CNH sink through its 200-DMA & probe the water

below the 50-DMA, despite initially showing above the key CNH7.0 mark. 

- The rate crept higher early on as participants assessed the economic fallout

from the coronavirus outbreak. In addition, local Caixin Services PMI Survey

missed consensus (albeit it remained in expansion). 

- Once cleanly breached, the CNH7.0 level held through Asia-Pac hours, before

reports of progress in works on a coronavirus vaccine put a strong bid into the

yuan. Chinese TV noted that researchers from Zhejiang University have found "an

effective drug to treat people with the new coronavirus," while Sky highlighted

"breakthrough" work by scientists from Imperial College London.

- The sell-off moderated as the WHO played down those reports, while the U.S.

released upbeat data. Annual trade deficit shrank for the first time in 6 years

as imports from China tumbled. China publishes its own trade figures on Friday.

- USD/CNH trades -35 pips at CNH6.9719. Bears look for a drop below

CNH6.9558/32, the 38.2% retracement of YtD range/Jan 29 low. Bulls keep an eye

on the 200-DMA at CNH6.9916; a break would return the focus to the CNH7.0 level.