China's economic outlook is starting to improve again.

The strengthening of the Chinese yuan is due to the People's Bank of China (PBOC) setting a higher central rate. The Chinese government is concerned about the depreciation of the currency, along with mild inflation and multiple interest rate cuts by the PBOC. These factors are seen as positive signals for the short-term Chinese economy. However, there are several other factors that need to be closely monitored as well.

The Consumer Price Index (CPI) in China increased by 0.1% year-on-year (YoY) in August, which was lower than the market expectations of 0.2%. Despite being a modest increase, it is considered a positive signal, especially after the deflation of -0.3% in the previous month, indicating a stabilizing Chinese economy. Additionally, China's statistics bureau recently mentioned that inflation rates are expected to gradually rise. The Core CPI, which excludes food and energy prices, remained unchanged at 0.8% YoY, the same as the previous month.

Data shows that China's trade surplus reduced to $68.36 billion in August from $78.65 billion in the same month the previous year. The primary issue for China at the moment is a significant decline in exports, reflecting sustained external vulnerabilities due to the currency crisis and high interest rates.

Imports into China decreased by 7.3% YoY to $216.51 billion, despite continued domestic economic stimulus. Domestic demand remains weak, with most imports declining, although there was a slight increase in energy imports. Exports decreased by 8.8% YoY to $284.87 billion, with exports to major trading partners, such as the United States, dropping by 9.53% from the previous year, and exports to the European Union decreasing by 19.58%. However, exports to Russia increased by 16%, with the potential for further growth if various situations remain tense.

China's new credit expansion has increased to 1.36 trillion yuan as the People's Bank of China (PBOC) has a clear goal of supporting economic growth to counter both domestic and external challenges. They are using financial tools such as reducing the reserve requirement ratio (RRR) to ensure there is sufficient liquidity for household loans, including increased mortgage loans amounting to 392.2 billion yuan.

Techical analysis data (5H)

Resistance: 7.2968, 7.3014, 7.3089

Support: 7.2847, 7.2772, 7.2726

Source: Investing.com