The offshore yuan recently remained stable at about 7.06 per dollar despite expectations of new economic boosts. The National Development and Reform Commission (NDRC) hinted at no immediate additional stimulus, which left some investors wanting more.
The daily chart below shows the USD/CNH price as of this writing.
New Stimulus Announcements
During a recent press briefing, Zheng Shanjie, the Chairman of the NDRC, introduced significant financial measures to support local economies. He announced the issuance of particular purpose bonds worth an impressive CNY 1 trillion, earmarked for various regional initiatives.
Moreover, Zheng outlined an expedited investment strategy involving CNY 100 billion that will be rolled out by month’s end—sooner than initially planned. This proactive approach is part of a broader effort by China to fuel economic growth amid global challenges.
Broader Economic Stimulus
Following this announcement, China has introduced several measures to strengthen the economy. These include cutting interest rates, reducing the money banks need to hold in reserve, making it easier to buy properties, and putting more money into the stock markets. These actions are intended to help boost economic activity and ensure continued growth across the country.
USDCNH Forecast – 8-October-2024
FxNews—The USD/CNH currency pair is trading in a bear market, having tested the AB wave’s 50% Fibonacci level at 7.055 in today’s trading session. Meanwhile, the Awesome Oscillator histogram is red, approaching the signal line from above, indicating that the bear market could resume.
However, the bears (sellers) face a critical support area that spans between the BC wave Fibonacci levels of 50% and 61.8%. Therefore, from a technical perspective, the uptrend will likely resume if the 7.044 resistance level holds, which corresponds to the 61.8% Fibonacci level of the BC leg. In this scenario, the USD/CNH price could potentially revisit the October 4 high at 7.104.
Conversely, if bears (sellers) push the USD/CNH price below the critical support of 7.044, a new bearish wave will likely be triggered. If this strategy unfolds, the next bearish target in this scenario could be the October 1 low at 7.022.