China is still suffering from a shrinking real estate sector.

The Chinese yuan has experienced its lowest value drop in a week due to concerns about the country's economic outlook. Investors remain wary as economic indicators continue to disappoint, and China lacks comprehensive measures to support its struggling economy. Investors are particularly monitoring regulatory interventions aimed at stabilizing the heavily troubled real estate sector, which is considered a major contributor to the current economic challenges.

During a working meeting with regulatory agencies overseeing currency exchange, the People's Bank of China (PBOC) announced its intentions. China's outlined strategy involves maintaining a path of reducing interest rates for personal housing loans and down payment ratios to aid consumer spending. Additionally, surveys have revealed that average prices of new homes in several Chinese cities are consistently declining.

Alvin Tan, the Head of Asian Foreign Exchange Strategy at RBC Capital Markets, stated, "Although China is beginning to introduce supportive measures in various sectors, the market doesn't perceive significant support for the real estate sector. The decline in home prices needs to be controlled before people regain confidence to start spending again."

The PBOC has expressed its intention to reduce financial costs for various companies, aiming to ensure stability within these companies and maintain investor confidence. Furthermore, the PBOC has engaged in discussions with officials from banks and the State Administration of Foreign Exchange (SAFE) to explore avenues for stabilizing the yuan's value. The goal is to provide enhanced support to companies, shielding them from the risks posed by exchange rate fluctuations.

Additionally, the release of China's Manufacturing Purchasing Managers' Index (PMI) indicated a decline to 49.2 in the past month, down from 50.5 in June. This represents the lowest contraction in six months. The decrease in new orders and a significant contraction in foreign sales, the most severe since September of the previous year, contributed to this decline. Moreover, ongoing job cuts persisted for the fifth consecutive month, attributed to companies cutting costs to compete in the market.

The PMI for the service sector slightly increased to 54.1 in the previous month from June's figure of 53.9. This exceeded the forecast of 52.5 and was supported by the expanding service sector market, which is growing at a faster rate. As a result, various companies have been increasing salaries over the past 4 months. This has led to a consecutive 6-month period of increased hiring activities.

Techical analysis data (5H)

Resistance: 7.1749, 7.2087, 7.2255

Support: 7.1242, 7.1073, 7.0735

Source: Investing.com