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• The Shanghai Composite drops 0.87%, and the Shenzhen Component loses 0.63% as China’s economy grows 6.3% in Q2, below analyst expectations of 7.3%.
• Industrial production and fixed asset investments exceed expectations, while retail sales miss forecasts, raising concerns about China’s post-pandemic recovery.
• Commodity-linked and financial stocks lead the decline, with notable losses from Yunnan Lincang, Zijin Mining, China Shenhua Energy, ICBC, Ping An Insurance, and China Merchants Bank.
• Offshore yuan weakens against the dollar, reflecting investors’ reaction to lower-than-expected economic growth and mixed data in China.
• Market hopes rise for additional stimulus measures from Chinese authorities to support the faltering economic recovery.
• The People’s Bank of China affirms its policy leeway to address challenges and changes, hinting at potential tools like reserve requirement ratio adjustments and medium-term lending facilities.
• China’s 10-year government bond yield remains near ten-month lows as expectations grow for further policy easing.
• Chinese cabinet pledges policy measures to strengthen the economic recovery following downgraded GDP growth forecasts by major banks.

The dollar exhibits a 0.4% gain against the Chinese Yuan, fueled by supportive buyers found around the upper value extreme of the Year. The market sets its sights on the swing highs, propelled by anticipated economic stimulus measures. The prior Year’s upper value close level might be reason for downside rotation in favor of the Yuan.

In the short-term perspective, a modest rally takes shape, with the developing VWAP and lower value extreme acting as crucial support levels in the event of a retracement. Traders eye the prior VWAP close level at CNH7.1444, a potential target for building core long positions.

2 Months Ago

Furthermore, the lower dollar index across various intervals from short- to long-term remains a bullish nuance for the Chinese Yuan, adding further weight to its upward potential.

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