USD/CNY in a relief rally after a surprise China GDP data miss

The USD/CNY pair rose after the mixed Chinese economic data. It rose to a high of 6.5331, which is slightly higher than 6.5180.

Chinese yuan price action

China GDP data

China has done well during the pandemic. It has a population of more than 1.4 billion people and it was the source of the virus. Yet, the country only recorded 103,000 cases and fewer deaths. At the same time, its economy was the first to recover from the pandemic.

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The Chinese economic growth happened as demand for its goods rose as more countries implemented lockdowns. Also, the government unleashed billions of dollars worth of stimulus to support the economy.

The USD/CNY price is today reacting to the latest economic growth numbers from China. The numbers revealed that the economy expanded by 0.6% in the first quarter after rising by 2.6% in the fourth quarter. This growth was less than estimates and was due to the week-long Lunar New Year. It rose by 18.3% year-on-year, a slower growth than the expected 19.0%.

The Chinese growth was spread across all sectors. Fixed asset investments grew by 25.6% as companies expanded their locations to meet global demand. Consumer spending and government investments also rose. 

Further data showed that retail sales rose by 34.2% in March after rising by 33.8% in the previous month. This increase was better than the median estimate of 28%. Year-to-date, sales have risen by 33.9%.

Meanwhile, the unemployment rate dropped from 5.5% in February to 5.3% in March while industrial production rose by 14.1%. 

The Chinese economy will continue firing on all cylinders since demand will keep rising. Indeed, the country is an indirect beneficiary of the recent US stimulus and upcoming infrastructure project since it is a leading trading partner.

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USD/CNY technical analysis

USD/CNY technical chart

The USD/CNY price has been on a downward trend after it reached a high of 6.5792 this year. It has fallen by more than 0.70% in the past few days. On the four-hour chart, the pair’s downward trend is being supported by the 25-day and 15-day moving averages. 

The recent jump happened after the price dropped to the 38.2% Fibonacci retracement level. Therefore, the pair may resume the downward trend as traders eye the 50% retracement at 6.50. Nonetheless, the USD/CNY can be highly volatile because of the actions of the PBOC. As such, always use the risks management tools provided by the forex and CFD broker when trading it.

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