China's exports has increased significantly.

The yuan has stabilized at around 7.11 yuan per U.S. dollar after the disclosure of inflation and trade balance figures for China in December. The data indicates that China's economy still faces inflationary pressures, despite government support. Investors are closely watching China's GDP figures, which are expected to be announced this week, to assess the economy's growth potential in the fourth quarter. If GDP comes in lower than expected, it may exert pressure on the People's Bank of China to cut interest rates, necessitating additional economic support measures.

China's inflation rate continues to decline, down by 0.3% year-on-year in December, marking the third consecutive monthly decrease. This is influenced by a continuous decline in food prices. Excluding food and energy, the core inflation rate increased by 0.5% year-on-year, showing the first increase in three months.

Food prices in China decreased by 3.7% year-on-year in December, marking a six-month consecutive decline. Beef prices decreased significantly by 26.1%, attributed to increased demand in the last month of the year. Additionally, chicken egg prices decreased by 7.0%, while cooking oil and fresh vegetable prices increased slightly by 0.4%.

China's trade surplus increased to $75.34 billion in December, up from $70.65 billion in the same month last year, marking the largest trade surplus in three months. This growth is attributed to expanding exports surpassing imports, with imports increasing by 0.2%, totaling $28.2 billion. The data indicates ongoing fragility in domestic demand. Imports of energy and iron ore increased by 11%, notably from Australia, which saw a substantial increase of 24.9%, while imports from Taiwan decreased by 9.0%.

China's exports increased by 2.3% year-on-year, totaling $303.6 billion in December, marking the second consecutive month of export growth. This suggests a gradual recovery in global trade. However, for the entire year 2023, exports contracted by 4.6%, with crude oil exports decreasing by 7.7%, while exports of automobiles surged by 69%, driven by government support for electric vehicles, which gained popularity due to their lower prices.

The yield on China's 10-year government bonds is under pressure, remaining at 2.5%. The persistent monetary tightness is seen as a factor contributing to economic contraction. Investors believe that the government needs to disclose additional economic support measures soon to address the pressure from monetary tightness and uncertainties regarding the economic recovery following the virus outbreak.

Techical analysis data (5H)

Resistance: 7.1770, 7.1821, 7.1875

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.1611 - 7.1665 but cannot break the support at 7.1665, you may set a TP at approximately 7.1821 and SL at around 7.1560 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.1770 - 7.1821, you may set a TP at approximately 7.1875 and SL at around 7.1611 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.1770 - 7.1821 but cannot break the resistance at 7.1770, you may set a TP at approximately 7.1611 and SL at around 7.1875 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.1611 - 7.1665, you may set a TP at approximately 7.1560 and SL at around 7.1821 or according to your acceptable risk.

Pivot point January 15, 2024 02:50 PM. GMT+7