We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • Heads Up:🇬🇧 GBP Unit Labor Costs (YoY) (2Q) due at 09:30 GMT (15min), Actual: N/A Expected: N/A Previous: 2.1% https://www.dailyfx.com/economic-calendar#2019-11-20
  • RT @mynamejd: SP500 earnings revisions up & down per sector - Source Refinitiv https://t.co/bvmlQCltkN
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.87%, while traders in US 500 are at opposite extremes with 79.99%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/06877Dk0Iz
  • Heads Up:🇪🇺 EUR ECB Publishes Financial Stability Review due at 09:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2019-11-20
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Gold: 0.37% Silver: 0.22% Oil - US Crude: -0.49% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Nl2cW4qqNE
  • US Dollar Selloff May Accelerate After #FOMC Minutes Released - https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2019/11/20/US-Dollar-Selloff-May-Accelerate-After-FOMC-Minutes-Released.html
  • Copper Price Trend May Reverse on FOMC Minutes - https://www.dailyfx.com/forex/fundamental/article/special_report/2019/11/20/Copper-Price-Trend-May-Reverse-on-FOMC-Minutes.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #copper #fomc
  • Forex Update: As of 08:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.13% 🇨🇭CHF: -0.00% 🇪🇺EUR: -0.13% 🇨🇦CAD: -0.21% 🇳🇿NZD: -0.22% 🇦🇺AUD: -0.24% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6ztmAWF3DV
  • $EURGBP broke through a congestive range it has been stuck in since around mid-October. What are the implications for the pair’s downside breakout and where is it heading? Get your market update from @ZabelinDimitri here:https://t.co/hHaGgulbQD https://t.co/CPQtpgNWUh
  • Indices Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.26% US 500: -0.27% France 40: -0.37% Germany 30: -0.46% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/w3yUQukPaf
USD/CNH Stays Elevated as Markets Await Next Shots in Trade War

USD/CNH Stays Elevated as Markets Await Next Shots in Trade War

2018-09-06 14:00:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Talking Points:

- The China-US trade war is set to escalate later this week when the US' public comment period ends.

- The new measures would impose tariffs on approximately half of all Chinese exports to the US.

- New trade war developments would damage risk appetite further, already weighed on by contagion in emerging markets.

See the DailyFX Trade War Infographic for a visual history of the events that led to the US-China trade war.

The China-US trade war is set to deepen later this week when the public comment period for the US tariff proposal ends later today on Thursday, September 6. The US has already imposed tariffs on $52 billion worth of Chinese imports, and the new measures would place tariffs on essentially half of all Chinese imports into the US (over $505 billion imported in 2017).

While market participants have mostly brushed aside trade war escalations thus far, new tensions will come against a deteriorating risk appetite backdrop given concerns proliferating about emerging markets. The BRATS currencies - Brazil, Russia, Argentina, Turkey, and South Africa - have come under significant pressure in recent weeks, and the Chinese Yuan isn't far behind.

Even if there is a case to be made about domestic Chinese concerns that might give investors reason for pause (just as there are domestic Argentinian, Turkish, and South African reasons provoking the weakness in those respective currencies), the US-China trade war is clearly to most significant driver of USD/CNH in the short-term.

Moving forward, the tit-for-tat strategy of exchanging tariffs with the United States is going to continue for China, but not for long. After all, while the US imported $505.5 billion of goods from China in 2017, China only imported $129.9 billion from the United States.

USD/CNH Daily Price Chart: Daily Timeframe (September 2017 to September 2018) (Chart 1)

USD/CNH Stays Elevated as Markets Await Next Shots in Trade War

If China is running out of runway to implement tariffs back on US imports, it seems very likely that it will turn its attention to the Chinese Yuan. US President Trump has repeatedly criticized China (and the EU) for intentionally depreciating its currency, even if the evidence proves otherwise.

But as recent FX reserves figures show, the People's Bank of China has plenty of dry powder available if it wanted to neutralize the impact of the Trump tariffs. We've previously explained how a sustained depreciation by the Chinese Yuan could offset the economic consequences of the Trump tariffs, and the fact that USD/CNH has stayed elevated speaks to market participants' belief that the trade war has yet to crescendo.

Read more: US Dollar Aims for Fourth Gain in Five Days as EM FX Woes Deepen

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com.

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.