Demand in China remains sluggish.

The yuan has strengthened rapidly after a slight decline in the previous period. This appreciation of the yuan persists even though it is anticipated that the People's Bank of China will further reduce interest rates in the upcoming meeting. Additionally, the U.S. Federal Reserve's decision to lower interest rates by 50 basis points has positively impacted the Chinese central bank's policy movements, allowing for further interest rate cuts without significantly affecting the currency's value.

Investors continue to focus on the upcoming meeting to see how monetary policy will be managed, following the release of economic data showing no significant growth. The primary pressures still stem from the high unemployment rate, as well as sluggish growth in the manufacturing sector and household spending.

China's unemployment rate stood at 5.3% in August, with the rise in unemployment reflecting the fact that job creation has not kept pace with population growth. Furthermore, the increasing number of university graduates has exacerbated the unemployment issue. From the perspective of companies, announcing additional job openings would only increase costs, while the weakening of demand both domestically and internationally, driven by slower-than-expected growth and trade restrictions, continues to be a concern.

China's industrial production grew by 4.5% year-on-year in August, lower than the market's expected growth of 4.8%, and slower than the 5.1% growth recorded in July. This slowdown was partly due to volatile summer weather, which hindered production in many manufacturing sectors. However, the growing demand for technology has kept the production of electronic equipment in high demand.

Chinese banks issued new loans worth over 900 billion yuan in August, which reflects the continued sluggish economic growth in China. Meanwhile, the growth of outstanding loans slowed to 8.5%. Despite the central bank’s interest rate cuts, aimed at stimulating China’s weakening demand, the total value of new loans issued by the central bank in the first month of the year amounted to just 14.43 trillion yuan. Overall, lending in China remains sluggish even with these rate cuts.

Techical analysis data (5H)

Resistance: 7.0735, 7.0858, 7.0923

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.0482 - 7.0547 but cannot break the support at 7.0547, you may set a TP at approximately 7.0858 and SL at around 7.0358 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.0735 - 7.0858, you may set a TP at approximately 7.0923 and SL at around 7.0482 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.0735 - 7.0858 but cannot break the resistance at 7.0735, you may set a TP at approximately 7.0482 and SL at around 7.0923 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.0482 - 7.0547, you may set a TP at approximately 7.0358 and SL at around 7.0858 or according to your acceptable risk.

Pivot point September 19, 2024 10:18 PM. GMT+7