• USD/CNY extended decline on Wednesday as as better-than-expected inflation data and quicker export growth buoyed the Chinese currency.
• China’s factory-gate inflation picked up in August, with the producer price index rising 3.8% from a year earlier, compared with 3.5% in July and expectations of 3.6%.
• China’s consumer price index rose 0.8% year-on-year in August, accelerating from a 0.5% increase in July.
•This comes on the heels of strong export data released the previous day, with China's August exports jumping 25% year-on-year, led by high-tech and AI-related demand.
Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 6.7769 per dollar, its strongest since February 8, 2023.
• Immediate resistance is located at 6.722(SMA20), any close above will push the pair towards 6.731(38.2%fib)
• Support is seen at 6.705(23.6%fib) and break below could take the pair towards 6.700 (Psychological level).
Recommendation: Good to sell around 6.710, with stop loss of 6.740 and target price of 6.680
