China’s CPI dropped -0.5% yoy in November, well below expectation of 0.0% yoy. That’s also the first annual decline in more than a decade since October 2009. Though, it’s driven by one off factor as pork supply improved from the disruption African swine fever. At the same time, demand remained solid despite Wuhan coronavirus outbreak. PPI decline slowed to -1.5% yoy, versus expectation of -1.8% yoy.
Offshore Chinese Yuan’s up trend against dollar resumes today, with USD/CNH now pressing 6.5 handle. Near term outlook stays bearish as long as 6.5968 resistance holds. Next target is 61.8% retracement of 6.0153 (2014 low) to 7.1953 at 6.4661. Strong support is expected from there to bring a sustainable rebound, based on pure technical perspective.
Though, recent decline in USD/CNH is seen as more as an indication of general weakness in Dollar against Asian majors. Sustained break of 6.4661 could signal acceleration in the flows, which might spread to selling in the greenback elsewhere.