The USD/CNY price remained under pressure on Wednesday morning as investors reflected on the relatively weak Chinese economic data. It is trading at 6.4426, which was a few points above this week’s low of 6.4323.
China economy slowing
The Chinese economy is slowing, according to the latest data by the statistics agency. The data showed that the fast-growing housing sector has started to lag.
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House prices declined from 4.6% in July to 4.2% in August. The sector has been hit hard by the near-collapse of Evergrande, the most indebted developer in the country. The company has struggled to sell thousands of its housing projects even after giving significant discounts.
Meanwhile, retail sales declined from 8.5% in July to 2.5% in August. Economists polled by Reuters were expecting the data to come in at 7.0%. This decline was because of some lockdowns implemented in Chinese cities.
Fixed asset investments and industrial production also declined. These investments fell from 10.3% to 8.9% while industrial production fell from 6.4% to 5.3%. These numbers mean that the country’s economy is starting to normalise.
The USD/CNY pair is also reacting to the latest American inflation numbers that were published on Tuesday. The data revealed that the headline consumer inflation declined from 5.4% to 5.3% while core inflation fell from 4.2% to 4.0%.
Still, the country’s inflation is above the Federal Reserve’s target of 2.0%. Therefore, with the unemployment rate falling, there is a likelihood that the central bank will sound hawkish in next week’s monetary policy meeting.
USD/CNY technical analysis
The four-hour chart shows that the USDCNY has been in a bearish trend in the past few weeks. It has moved from a high of 6.5110 to a low of 6.4418. Recently, the pair has formed a double-bottom pattern at 6.4323, which was the lowest level since June this year. It is also about 1.10% below the highest level this year.
The pair has moved below the 25-day and 50-day moving averages while the stochastic oscillator has moved to the oversold level. Therefore, the pair will likely maintain the bearish trend if it moves below the key support at 6.4323.
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