USDCNH This Past Week
USDCNH Monthly time Frame Market has reached the higher low area of the Ascending channel Pattern.
USDCNH can be considered among the more stable currency pairs in the forex industry. China is always very efficient with their production and manufacturing and therefore usually face no economic issues on their end. This can be seen with their currency as well as there was hardly any volatility being displayed this past week.
The lowest we’ve seen this pair at this past week was around the 6.367 mark. Similarly, the highest point we’ve seen so far for this pair in the last week was when it was teasing around the 6.398 region. This high point was just seen before the market closed for the week and it definitely did not expect the events that were going to unfold in the upcoming week.
USDCNH Market has reached the lower high area of the Descending channel Pattern.
The global COVID-19 pandemic was the single-most life-changing event that occurred in the past couple of years. This health crisis had forever changed the way we view the world. It also forever changed the forex markets. Who knew something as little as a virus had the ability to destabilize economies and bring the world to a complete standstill. Once this virus was declared a pandemic, only then did people start taking it seriously. Lockdowns had to be imposed and businesses had the brunt of the impact. Since they couldn’t open stores, they lost profits due to having no customers. Many businesses entered bankruptcy as a result of the pandemic. They had to be shut down or shifted completely online in order to function during this crisis. No one thought the pandemic crisis would get as bad as it did. No one thought it would stay for as long as it has either. Once the vaccines started rolling out, only then did we see some stabilization occur among different economies. Businesses were reopening and finally making profits once again. But it seems as though this didn’t last for long.
Early on Monday, it was revealed that Shanghai had been facing a major rise in covid cases. They were unable to properly bring these numbers under control and the rates were becoming extremely alarming. In order to bring the cases under control, it was revealed that Shanghai would be going under another lockdown. This lockdown would be a week-long but could extend much longer if the cases are still not under proper control. China’s economy had one of the worst impacts of the pandemic. It took them really long to recover from this crisis. Therefore the fact that they’re facing another wave is really bad news for their economy. Businesses are having to shut down once again. The worst part of this entire ordeal is that production and manufacturing would have to be put at a standstill. These are the industries that are really running China’s economy. If China is unable to maintain production and manufacturing without risking the health and safety of its workers, it may be facing a huge problem.
PBoC Monetary Policy
The People’s Bank of China has been closely monitoring the economic conditions of the country this past week. There have been several recent events that have been deciding factors for what the potentially new monetary policies are going to look like. Analysts have been eyeing the recent expenditure on China’s oil fields in order to increase production levels to meet the growing demand of the people around the world. They’ve also been eyeing the rising COVID-19 cases and how they may potentially play a role in slowing down the economy due to pauses in the production and manufacturing industries.
Analysts at Maybank had a few words to say on this current situation. They revealed, “Concerns about the impact of China’s zero-COVID strategy on production, as well as already anemic consumption, weighed on yuan sentiment, prompting calls for monetary policy to support credit and stabilize growth.” Guan Tao, Global Chief Economist at BOC International also revealed stating, “The yuan depreciation is the result, rather than the cause, of foreign investors’ decision to reduce their holdings of Chinese assets. If foreigners’ concerns could not be resolved immediately, money would not flow back to China in the short term, even if the currency is stabilized.”
USDCNH has rebounded from the lower low area of the Falling Wedge Pattern.
Feds Powell Speech
The speech by the Feds Chairman, Jerome Powell which was held earlier last week is still hot on the minds of several analysts globally.
Powell revealed his plans for increasing the interest rates by 0.5% from now on instead of the usual 0.25%. The inflation crisis in the country is out of control and therefore 0.25% increases are not enough to get ahead of this problem. He believed an increase of 0.5% per term is the only way to properly get one step ahead of the inflation crisis and finally bring it under control.
Looking at the USDCNH chart today, we can see that it is following a bearish market trend as it slopes downwards. This dynamic duo is struggling to hold above support levels considering the recent events that unfolded over the weekend into the start of the week.
USDCNH has fallen from the higher high area of the Ascending channel pattern
What was previously a stable currency pair now faces a ton of spotlight as we find out what its next move is going to be. USDCNH is currently teasing at the 6.38 mark and it looks as though it may still drop down much lower till the end of the day. The Shanghai lockdown and anticipation of interest rate hikes are the main contributing factors to the rates we’re witnessing today.
Upcoming Important Events
We may be witnessing a rather slow start to the week as there aren’t that many major events that we need to concern ourselves with. Early tomorrow we’re going to be expecting the results of the Australian Retail Sales report for the month. This is important to understand the level of consumer spending occurring in the economy. The U.S. JOLTS Job Openings data will also be revealed later tomorrow. This contains the number of jobs that are vacant in the economy. It is important to know the employment situation of the country. Be sure to keep checking us out so you don’t miss on any major events that could impact the forex markets.