China's manufacturing sector continues to slow down.

The yuan depreciated slightly due to mixed economic data. In the real estate sector, new home prices in 70 major cities fell by 4.9% year-on-year, highlighting the worsening property crisis despite government support. Additionally, the slowdown in manufacturing growth reflects weakened demand, raising concerns about the strength of the country's recovery.

Chinese banks extended new loans worth 260 billion yuan in July, marking the smallest new loan expansion since 2009, down sharply from 345 billion yuan in the same period last year. The growth in outstanding loans of over 8.7% indicates a decline in household spending power, while companies face rising production costs.

China's inflation rate rose to 0.5% in July from 0.2% in June, marking the sixth consecutive month of inflation growth. This is due to the government’s ongoing economic stimulus measures aimed at boosting consumption, particularly in the household sector. As a result, food prices have risen again after more than a year of slowing down, amid fluctuating weather conditions. Meanwhile, non-food prices continued to rise by 0.7%, particularly clothing prices. Core inflation, which excludes volatile food and energy prices, increased slightly by 0.4% year-on-year, the smallest rise in six months.

China's services PMI surged to 52.1 in July, exceeding market expectations of 51.4, marking the 19th consecutive month of growth in the services sector. The service sector was bolstered by a rapid increase in new orders, leading to continued growth in export sales, particularly from foreign demand supported by the growth of tourism activities. Employment saw the largest increase in nearly a year after declining in June. However, production costs continued to rise, driven by higher costs for raw materials, labor, and transportation.

China's manufacturing PMI fell to 49.4 in July from 49.5 in the previous month, marking the third consecutive month of contraction in the manufacturing sector. The decline was impacted by shrinking factory activities, particularly the largest drop in new orders since February, leading to a decrease in foreign sales. This also reflects weak demand, heightened deflationary risks, a slowdown in real estate, and a continued rise in unemployment.

The yield on China's 10-year government bonds fell to around 2.18% following the release of mixed economic data, leaving investors with a clouded view of the overall economy. The majority of problems continue to stem from severe demand shortages and excess supply, as evidenced by the weak manufacturing sector. This slowdown extends to the real estate sector, which continues to decelerate despite some government economic stimulus policies.

Techical analysis data (5H)

Resistance: 7.172, 7.1796, 7.1838

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.1562 - 7.1603 but cannot break the support at 7.1603, you may set a TP at approximately 7.1796 and SL at around 7.1486 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.172 - 7.1796, you may set a TP at approximately 7.1838 and SL at around 7.1562 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.172 - 7.1796 but cannot break the resistance at 7.172, you may set a TP at approximately 7.1562 and SL at around 7.1838 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.1562 - 7.1603, you may set a TP at approximately 7.1486 and SL at around 7.1796 or according to your acceptable risk.

Pivot point August 16, 2024 07:01 PM. GMT+7