USD/CNH fell below 7.0500, marking its lowest level since October 2024, amid weak November real sector data from China. Slower retail sales, subdued industrial production, and a sharper-than-expected drop in fixed asset investment highlight ongoing economic softness. A stronger yuan could support a shift toward consumer-driven growth, keeping the USD/CNH downtrend intact, BBH FX analysts report.
USD/CNH downtrend remains intact
"USD/CNH dropped under 7.0500, to its lowest level since October 2024."
"China’s November real sector data was weak. In the eleven months of the year, retail sales growth unexpectedly slowed to 4.0% y/y (consensus: 4.3%) vs. 4.3% in October, industrial production growth matched consensus at 6.0% y/y vs. 6.1% in October, and fixed asset investment growth slumped more than expected by -2.6% y/y (consensus: -2.3%) vs. -1.7% in October. Excluding real estate development, fixed asset investment growth was 0.8% y/y vs. 1.7% in October."
"In our view, a continued appreciation in China’s currency could help the country shift its growth model towards consumer spending by boosting disposable income through cheaper imports. Bottom line: USD/CNH downtrend is intact."
