The USD/CNY was little changed on Thursday after China published relatively strong GDP and retail sales numbers. It is trading at 6.4660, which is in the same range where it was in the past few days.
China GDP data
The Chinese economy recovery accelerated in the second quarter helped by the relatively strong local and international demand. According to the National Bureau of Statistics, the country’s economy rose by 1.3% from the first to the second quarter. This increase was better than the median estimate of 1.2%.
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It then led to a year-on-year growth of 7.9%, which was lower than the estimated 8.1%. The GDP figure was also lower than the previous quarter’s 18.3%, which is understandable since the country had a deeper contraction in the first quarter of 2020.
The Chinese GDP expansion was mostly because of the large local and international demand. Recent data showed that the overall Chinese exports continued rising in the past few months. This trend has been hindered by the ongoing logistics challenges facing the shipping industry.
As demand rose, China’s companies boosted their fixed asset investments. The overall investments rose by 12.6% in June after rising by 15.4% in May. Similarly, industrial production rose by 8.3% while retail sales rose by 12.1%. In total, sales have risen by 23% in 2021. The unemployment rate has also held steady at 5.0%.
The USD/CNY pair is also reacting to the latest US inflation numbers and the dovish Jerome Powell testimony. While US inflation has risen to the highest level in more than a decade, the Fed is still optimistic that it will drop to its target of 2.0%.
Looking ahead, the pair will react to the latest US initial jobless claims numbers scheduled for later Thursday. It will also react to the Philadelphia and New York manufacturing index data.
USD/CNY technical forecast
The USD/CNY has bounced back from this week’s low of 6.4490 to the current 6.4660. The pair has retested the lower side of the rising wedge pattern and moved slightly below the 25-day and 50-day moving averages. It also seems to be forming a head and shoulders pattern. Therefore, there is a likelihood that it will resume the downward trend since the recent bounce is part of the break and retest approach.
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