The Chinese government and central bank express determination to get down to the process of cutting interest rates along with easing the lending restrictions and limitations. This step is designed to prevent prices from going up, which may eventually trigger a series of bankruptcies, defaults and unemployment hikes.
It should be noted that the Chinese regulator has just made a statement on cutting interest rates. It is the first time since June 2012, Masterforex-V academy reports.
The thing is that the economic growth in CHina seems to be lower than expected by the authorities. In particular, in Q3 2014, the Chinese economy expanded only by 7,3% relative to the same reporting period in 2013. Even though the actual figures are slightly above the average analytic forecast, it is still below the government's expectations.
Indeed, the Chinese has recently shown the weakest quarterly performance in 5 years. The actual figures of 7,3% are below the official forecast of 7,5%, which means that the economy is under-performing in the government's eyes.
Meanwhile, the level of consumer inflation is still rather low, which puts Chinese manufacturers under pressure. With that said, production prices have been showing a negative tendency over the last 2-3 years. With that sad, the Chinese economy seems to be in jeopardy, which pushes the local authorities to take urgent steps, including interest rate cuts and consumer spending stimulation.
As for the Renminbi, it is currently showing weakness against the US Dollar. The price seems to be moving within the scope of a long-term reaction aimed at devaluing the Chinese Yuan, Masterforex-V Academy reports. Still, this is just a reaction to the existing downtrend in the market of USDJPY, which corresponds to the relative strength of the Renminbi.
The closest major level of resistance is 6,1525. The strengthening of the Chinese Yuan will resume if the price breaks below the bottom of the ascending MF sloping channel and pivot 6,1155, as shown in the chart below, courtesy of Masteforex-V Academy.
