China’s office for national statistics has just reported that the rate of inflation increased only by 1.8% in July 2012, which is -0.4% as opposed to June’s figures. Services appreciated by 2% while non-food products appreciated by 1.5%. The CPI increased by 1.9% and 1.5% for big cities and rural areas correspondingly.
If to consider the entire structure of the index, we will see that food constituents are bearish. Manufacturing constituents are bearish as well, thus hindering inflation. All this gives the People’s Bank of China a lot of space for maneuvers in terms of monetary policy.
China seems to have made considerable progress in fighting consumer inflation. Despite the fact that the CPI grew a bit last month, experts say the bearish tendency will last at least till the end of the year.
Forex.
The Chinese Yuan has strengthened a bit against the US Dollar of the last few days. experts report that after completing a rally, USDCNY is forming a bearish move represented by а(С)/С. The downswing of USDCNY will continue after the price breaks below the 6,3511 low. Alternatively, if the price overcomes the top of the MF sloping channel and breaks above 6,3930, we may see a trend reversal (as shown below):
