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Rangebound Ahead Of Data


After dropping in the European morning USD/CNH stuck resolutely to a range through the rest of the session, the pair last up 3 pips on the session at 6.5270, near the lowest level since March 24. In terms of technical levels support is seen at 6.5164, a 38.2% retracement level, while 6.5179 is the lower bound of a descending channel. On the upside 6.5300 offered resistance though the US session, with more significant resistance at a 23.6% retracement level 6.5437.

  • Markets await a number of important data releases from China; GDP, industrial production, fixed asset investment, retail sales and new home prices are all due.
  • SocGen on the data: "Due to COVID-19 resurgence, the first two months of 2021 saw a strengthening in industrial activity but a slowdown in retail sales and FAI growth. Going into March, we expect these trends to reverse slightly upon successful pandemic control. The normalisation would be primarily attributed to the reversal of the increase in working days in Jan-Feb 2021 due to the cancellation of Spring Travel. In addition, steel production restrictions in Tangshan beginning from 20 March, as well as auto chip shortage, also likely weighed on IP marginally. Nonetheless, the pace of industrial activity likely remained firm and above trend, as evident in the strong manufacturing PMI last month."
  • "Similarly, FAI growth likely decelerated from 35.0% to 16.8%. By sector, manufacturing and infrastructure investments likely led the rebound. Apart from the impressive excavator sales in the month, the latest PBoC survey also shows that demand for both manufacturing and infrastructure loans improved in 1Q. The construction PMI index also soared from 54.7 to 62.3, suggesting an imminent rebound in investment activities."
  • "We expect retail sales growth to decelerate from 33.8% to 28.0%, which would translate to a recovery from 2.7% to 3.3% in 2y CAGR terms, thanks to the successful containment of the COVID-19 pandemic. This was reflected in traffic data, which have returned to normal levels. That said, the recovery was likely tepid. The expansion in the quarter was likely driven by sturdy IP growth, which accelerated sharply from 7.1% in 4Q20 to c.28% in 1Q21, supported by the cancellation of Spring Travel and sturdy export demand. This likely more than offset the weakness in consumer services including catering, accommodation and transportation, whereas other services sectors such as property, finance and IT likely stayed resilient."

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