USD/CNH aims to surpass 6.9650 on downbeat Chinese Retail Sales data

• USD/CNH is inch far from surpassing the immediate resistance of 0.6950 as the Chinese Retail Sales contracted further.
• Chinese annual Retail Sales data (Nov) has contracted by 5.9% vs. -3.6% as expected.
• Fed chair Jerome Powell sees interest rate peak at 5.1% after pushing interest rates at 4.25-4.50%.

The USD/CNH pair has faced intermittent resistance around 6.9650 in the Tokyo session. The asset is expected to surpass the above-mentioned resistance as the National Bureau of Statistics of China has reported weaker Retail Sales data.

The annual Retail Sales data (Nov) has reported a contraction of 5.9% while the street was expecting a contraction of 3.6%. As retail demand has weakened further, it is going to impact negatively the Chinese Consumer Price Index (CPI) ahead. A severe contraction in retail demand is going to compel the People’s Bank of China (PBoC) to look for policy easing to support economic prospects and push inflation higher.

Apart from the Retail Sales data, annual Chinese Industrial Production has dropped to 2.2% vs. the consensus of 3.6% and the prior release of 5.0%. This seems to be the consequence of prolonged Covid-19 lockdown restrictions by the administration to contain the spread. As the Chinese government has rolled back various curbs after the protest from the general public, economic prospects will get track of progress.

Meanwhile, the US Dollar Index (DXY) has displayed a sheer recovery in the Asian session after printing a fresh six-month low at 103.49 on Wednesday. The USD Index has advanced above 103.80 on higher interest rate peak guidance by the Federal Reserve (Fed). Despite a significant United States CPI softening, the road to a 2% inflation target is far from over.

Fed chair Jerome Powell sees interest rate peak at 5.1% after pushing interest rates at 4.00-4.25% on Wednesday and has cited Average Hourly Earnings as the next threat to the harmony in the United States economy.