The Chinese economy remains fragile.

The yuan has appreciated beyond 7.21 yuan per US dollar, as the People's Bank of China (PBoC) maintained the one-year medium-term lending facility (MLF) rate at 2.5%. Additionally, the yuan's strength is supported by the depreciation of the US dollar, following a decline in US inflation to 0.3% month-on-month, down from 0.4% in the previous month. Meanwhile, China continues to face a real estate crisis, compelling the government to purchase millions of unsold homes with the goal of stabilizing and revitalizing the property market.

On May 15, the PBoC injected a total of 125 billion yuan through the MLF to financial institutions and kept the interest rate at 2.5%. This effort aims to stabilize the yuan and support the economy by increasing lending. The PBoC also added more than 2 billion yuan through government bond purchases.

The yield on China's 10-year government bonds has fallen below 2.3% following attempts to raise funds to stimulate the economy. The government plans to issue 30-year bonds on May 17, 20-year bonds on May 24, and 50-year bonds on June 14. The declining government bond yields indicate a slow economic recovery.

In April, new loans extended by the PBoC amounted to over 0.73 trillion yuan, a sharp decline from 3.1 trillion yuan in March. Data from the central bank shows that new loans totaled 10.19 trillion yuan in the first four months of the year. At the same time, credit and liquidity measures recorded a negative 200 billion yuan, marking the first contraction since January 2002.

China's inflation rate increased to 0.3% in April, marking the third consecutive monthly rise due to the ongoing recovery in domestic demand, despite the economy's fragile recovery. Non-food inflation saw a slight increase, with the majority of price hikes occurring in clothing and jewelry. Meanwhile, transportation costs rose by 0.1% after a 1.3% drop in the previous month, as the government raised prices for public utilities, including natural gas and rail fares.

Techical analysis data (5H)

Resistance: 7.221, 7.2226, 7.2258

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.213 - 7.2162 but cannot break the support at 7.2162, you may set a TP at approximately 7.2226 and SL at around 7.2113 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.221 - 7.2226, you may set a TP at approximately 7.2258 and SL at around 7.213 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.221 - 7.2226 but cannot break the resistance at 7.221, you may set a TP at approximately 7.213 and SL at around 7.2258 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.213 - 7.2162, you may set a TP at approximately 7.2113 and SL at around 7.2226 or according to your acceptable risk.

Pivot point April 16, 2024 09:24 PM. GMT+7