China's economy needs additional support.

The yuan has weakened to approximately 7.27 yuan per dollar, reflecting the ongoing signs of domestic economic weakness and a lack of substantial economic stimulus measures. This has led to a decline in market confidence. Additionally, inflation data released earlier this week showed that inflation rose less than expected, prompting predictions that the People's Bank of China might further cut interest rates this year. The central bank needs to maintain a balance between supporting the economy and preventing the yuan from depreciating rapidly due to interest rate cuts.

China's inflation rate stood at 0.3% year-on-year in May, marking the second consecutive month of stability and falling short of market expectations of 0.4%. Although inflation rose less than anticipated, it still signals a continued recovery due to the revival of domestic demand. Non-food inflation increased slightly to 0.8%, while core inflation rose 0.6% year-on-year.

China's trade surplus expanded to $82.62 billion in May 2024 from $65.550 billion in the same month last year, marking the highest trade surplus since February. This increase was due to exports growing more than imports.

Chinese exports rose by 7.6% year-on-year to $302.35 billion, surpassing market expectations of 6% growth. This was driven by a lower base from the previous year and a slight recovery in foreign demand, with significant contributions from a 16.6% increase in furniture sales and a 4.3% increase in electronics.

Imports into China grew by 1.8% year-on-year to $219.73 billion, sharply slowing down after an 8.4% increase in April. The latest figures indicate that domestic demand remains fragile and has not recovered as expected, despite ongoing government support measures.

The yield on China's 10-year government bonds remained steady at around 2.3% due to economic data not meeting expectations, while the producer price index remained in deflation. This supports expectations that the People's Bank of China will introduce additional stimulus measures to support the economy. Additionally, investors are watching for reports from the Biden administration regarding potential further restrictions on China's access to AI-related chip technology.

Techical analysis data (5H)

Resistance: 7.2564, 7.257, 7.2582

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.2534 - 7.2546 but cannot break the support at 7.2546, you may set a TP at approximately 7.257 and SL at around 7.2528 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.2564 - 7.257, you may set a TP at approximately 7.2582 and SL at around 7.2534 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.2564 - 7.257 but cannot break the resistance at 7.2564, you may set a TP at approximately 7.2534 and SL at around 7.2582 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.2534 - 7.2546, you may set a TP at approximately 7.2528 and SL at around 7.257 or according to your acceptable risk.

Pivot point June 14, 2024 07:10 PM. GMT+7