The USD/CNY price declined after the relatively strong economic data from China, the second-biggest economy in the world. The pair dropped to 6.4947, which is slightly below Friday’s close of 6.5100.
China in a strong rebound
The Chinese economy has made a lot of progress in the past few months. It was the only major global economy to record an annual GDP growth last year, according to the statistics agency.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
This growth is continuing this year as international demand and private consumption continues to rebound. Two weeks ago, data by the statistics office showed that the country’s exports and imports soared in January leading to a monthly surplus of more than $100 billion.
And today, numbers revealed that retail sales increased by 33.8% in February as the country marked the Lunar New Year. This improvement was better than January’s growth of 4.6% and the median estimate of 32.0%. In total, sales rose by 33.78% since January.
Meanwhile, the country’s industrial production increased from 7.3% in January to 35.1% in February. Analysts were expecting the figure to come in at 30.0%. Further, fixed asset investments, which are a key part of the economy, increased by35.0% while the house price index increased by 4.3%.
Analysts at many banks and forex brokers believe that the Chinese rebound will continue this year. They cite the recent US government stimulus package and the upcoming infrastructural spending package. As one of the US biggest trading partner, the country will benefit substantially after the deal. Also, demand for Chinese goods will keep rising as the world economy recovers.
USD/CNY technical forecast
The USD/CNY bounced above the important resistance at 6.4947 last week as US yields kept rising. It then rose to a multi-month high of 6.5435 and then erased some of the gains after the US inflation numbers.
The USD/CNY price is hovering slightly above the resistance at 6.5435 and is still along the 15-day and 25-day exponential moving averages (EMA). The Relative Strength Index (RSI) is also at the neutral level of 50.
The pair also seems to be forming a small bullish flag pattern. Therefore, the pair may rebound in the near term as bulls target the next key resistance level at 6.52. Still, traders should be cautious trading the pair because of potential interventions by the PBOC.
visit & create account