China Economic Weakness Again Sends Shivers Through the Global Financial Markets

Overnight, China released a slew of monthly economic data, and every data point was a disappointment:

   -- Exports: down 5.6% year over year (YoY)

   -- Imports: up 2.2% YoY (+5.5% expected)

   -- Trade Balance: 278.35 billion Yuan (364.5 billion Yuan expected)

In reaction to the data, the YEN strengthened (vs. the USD).

In that all of the action in USD/YEN off of the Dollar low at 99.02 on June 24, 2016, (just prior to Brexit) has carved out what my work indicates is a recovery or counter-trend rally, last eve's high at 104.36, followed by a decline to 103.55, has the right look of the conclusion of the June-Oct. digestion period within the otherwise dominant downtrend from the June 2015 high at 125.86.

If my work proves accurate, then USD/YEN is becoming increasingly vulnerable to a resumption of selling pressure that will press it towards a retest of 99.20, and thereafter to new lows projected into the 96.00-94.00 area.

Meanwhile, let's also notice that the USD has pushed up to 5-1/2 year highs versus the China YUAN (the Yuan is depreciating vs the Dollar) and, judging from the huge, multi-year bottom formation, has further to climb-- towards 7.00 in the weeks/months ahead, putting increasing pressure on both the Fed, and the PBOC, to preserve extremely accommodative monetary policy.