The November retail sales data in China was released earlier today by the National Bureau of Statistics of China (NBSC). According to the findings of the economic report, China's retail sales grew by 5.0 per cent in November.
The recorded performance missed the consensus forecasts for a 5.1 per cent growth only marginally. At the same time, the observed strengthening represents a major improvement from October's 4.3 per cent.
The country's retail sector has been strengthening consistently since the initial coronavirus crash in January, which is evocative of robust industrial expansion. The monthly growth rate is currently nearing the pre-crash levels of December 2019.
Meanwhile, the Chinese yuan continues to gain ground against the faltering greenback, as China's across the board successful handling of the pandemic has made the local market more appealing to international investors.
As can be seen on the weekly chart below, the USDCNY continues with its development of a massive Markdown, as postulated by the Wyckoff Cycle theory. The price action is nearing the major support level at 6.4700, which served as the upper boundary of the previous Accumulation range.
This could be the saving grace for the dollar, as the currency could benefit from the impact of market seasonality factor in January. Owing to this anticipated resurgence in demand for the king-currency at the dawn of the new year, the pair's plunge could be put in check.
Moreover, such a transformational change in the underlying demand for the two currencies could take place while the price action nears the aforementioned support with psychological significance. Hence, the likelihood of a rebound is increased.
Nevertheless, traders should not underestimate the strength of the current downtrend when planning to open contrarian trades. The latter could be inferred from the ADX indicator.