China is beginning to signal further economic support.

The yuan has weakened to around 7.22 yuan per US dollar. Additionally, there are reports indicating that state banks in China are showing increased support for the yuan by selling dollars domestically. Furthermore, signals suggest that Chinese central banks are increasingly uncomfortable with the weakening yuan, which has depreciated by almost 1% from expectations that China would relax policies further to support the economy's progress.

The People's Bank of China has kept its benchmark interest rate at 3.45% in its March meeting, aligning with market expectations. Meanwhile, the interest rate for five-year prime loans, which serves as a reference for mortgage loans, remains at 3.95% after a 25 bps reduction in February, marking a historically low level.

The People's Bank of China is persistently attempting to stimulate economic recovery amidst pressures from the real estate sector, loosening monetary conditions, and rapidly declining consumer confidence. Additionally, policies reducing the Required Reserve Ratio (RRR) have increased system liquidity, with room for further RRR reductions. Analysts believe China still has adequate monetary policy tools to facilitate domestic economic recovery.

Foreign Direct Investment (FDI) in China has decreased by 19.9% year-on-year, amounting to 21.51 trillion yuan or $30 billion in the first two months of 2024. However, investment totaling 71.44 trillion yuan continues to flow into high-tech industries, including high-tech manufacturing, and foreign investment in the construction sector has increased by 43.6% year-on-year. Additionally, investments in wholesale and retail industries have risen by 14.5%.

The unemployment rate in China stood at approximately 5.3% in February, up from 5.2% in January and 5.1% in December. The increasing unemployment rate poses significant pressure on the overall economy. The government predicts the unemployment rate will rise to about 5.5% and expects to create approximately 12 million new jobs.

Recent use of PBOC's financial tools indicates China's continued desire for robust economic growth, targeting a GDP growth rate of around 5% in 2024. Investors are also awaiting data on China's manufacturing and services activities in the coming days to assess the overall economic outlook.

Techical analysis data (5H)

Resistance: 7.2294, 7.2302, 7.2314

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.2262 - 7.2273 but cannot break the support at 7.2273, you may set a TP at approximately 7.2302  and SL at around 7.2253 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.2294 - 7.2302, you may set a TP at approximately 7.2314 and SL at around 7.2262 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.2294 - 7.2302 but cannot break the resistance at 7.2294, you may set a TP at approximately 7.2262 and SL at around 7.2314 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.2262 - 7.2273, you may set a TP at approximately 7.2253 and SL at around 7.2302 or according to your acceptable risk.

Pivot point March 27, 2024 09:12 PM. GMT+7