The Chinese government has been continuously implementing economic stimulus policies.

The yuan has strengthened to 7.07 yuan per dollar, supported by efforts from the People's Bank of China (PBoC) to boost the currently sluggish economy. Additionally, new policies have been announced to increase liquidity in the capital markets, along with support for the long-depressed real estate sector and continued cuts in housing loan interest rates.

Zheng Shanjie, Chairman of the National Development and Reform Commission (NDRC), announced plans to issue bonds to drive the growth of local governments. These special long-term government bonds will total 1 trillion yuan. Moreover, the government has unveiled additional investment plans worth over 100 billion yuan by next year. Despite these measures, the domestic economy has shown no significant signs of growth. The central bank is prepared to adjust monetary policies but must take inflationary impacts into consideration.

The PBoC has introduced a new policy, effective November 1, allowing homebuyers to renegotiate their mortgage terms. The aim is to control the rapid and prolonged slowdown in the economy, particularly in the real estate sector. Banks are required to reduce the interest rates on existing home loans by at least 30 basis points (bps) below the minimum loan rate. However, analysts predict that home loan rates will need to decrease by 50 bps to fully realize the policy's effectiveness. Nonetheless, outstanding loans are expected to continue declining as the central bank has been implementing supportive measures for the real estate sector since early last year.

China's foreign exchange reserves increased by $28.1 billion to $3.316 trillion in September, higher than the market's forecast of $3.3 trillion. This marks the third consecutive monthly rise in foreign exchange reserves, making the PBoC the central bank with the largest foreign reserves. At the same time, China has continued to accumulate gold reserves, which reached $191.5 billion from $183 billion in the previous month, in line with the ongoing rise in gold prices.

The yield on China's 10-year government bonds remained stable at around 2.18% after the PBoC implemented various policies to stimulate the economy, including promoting the stock market and supporting the real estate sector. Furthermore, additional spending to enhance liquidity in the economic system, amounting to over 1 trillion yuan, has been introduced.

Techical analysis data (5H)

Resistance: 7.0829, 7.0848, 7.0887

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.0732 - 7.0771 but cannot break the support at 7.0771, you may set a TP at approximately 7.0848 and SL at around 7.0713 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.0829 - 7.0848, you may set a TP at approximately 7.0887 and SL at around 7.0732 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.0829 - 7.0848 but cannot break the resistance at 7.0829, you may set a TP at approximately 7.0732 and SL at around 7.0887 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.0732 - 7.0771, you may set a TP at approximately 7.0713 and SL at around 7.0848 or according to your acceptable risk.

Pivot point October 10, 2024 11:24 PM. GMT+7