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
Bearish
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
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
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
USD/JPY
Mixed
More View more
Real Time News
  • Hey, traders 👋 do you want live AMAS with our analysts, market updates and tools to improve your trading strategy? Join us now on Instagram! 👉 https://t.co/pHGzVMI3tC https://t.co/aYVJ6Xo3do
  • Heads Up:🇨🇭 CHF Unemployment Rate s.a. (MAR) due at 05:45 GMT (15min), Actual: N/A Expected: 2.6% Previous: 2.3% https://www.dailyfx.com/economic-calendar#2020-04-08
  • Heads Up:🇨🇭 CHF Unemployment Rate (MAR) due at 05:45 GMT (15min), Actual: N/A Expected: 2.6% Previous: 2.5% https://www.dailyfx.com/economic-calendar#2020-04-08
  • 🇯🇵 JPY Eco Watchers Survey Outlook SA (MAR), Actual: 18.8 Expected: 20.0 Previous: 24.6 https://www.dailyfx.com/economic-calendar#2020-04-08
  • 🇯🇵 JPY Eco Watchers Survey Current (MAR), Actual: 14.2 Expected: 22.4 Previous: 27.4 https://www.dailyfx.com/economic-calendar#2020-04-08
  • 🇯🇵 JPY Eco Watchers Survey Current (MAR), Actual: 14.2 Expected: 22.0 Previous: 27.4 https://www.dailyfx.com/economic-calendar#2020-04-08
  • Heads Up:🇯🇵 JPY Eco Watchers Survey Outlook SA (MAR) due at 05:00 GMT (15min), Actual: N/A Expected: 19.0 Previous: 24.6 https://www.dailyfx.com/economic-calendar#2020-04-08
  • Heads Up:🇯🇵 JPY Eco Watchers Survey Current (MAR) due at 05:00 GMT (15min), Actual: N/A Expected: 22.0 Previous: 27.4 https://www.dailyfx.com/economic-calendar#2020-04-08
  • 🇯🇵 JPY Bankruptcies (YoY) (MAR), Actual: 11.78% Expected: N/A Previous: 10.71% https://www.dailyfx.com/economic-calendar#2020-04-08
  • #Bitcoin prices may see a pickup in volatility ahead of the 2020 halving as the #coronavirus pandemic threatens to disrupt cross-continental $BTC mining operations. Get your market update from @ZabelinDimitri here: https://t.co/BoH24NcPWn https://t.co/fPHcZECKdU
Yuan Under Pressure on Resumed Trade War, Eyes on PBOC for Key Level

Yuan Under Pressure on Resumed Trade War, Eyes on PBOC for Key Level

2018-09-02 02:00:00
Renee Mu, Currency Analyst
Share:
USD/CNH chart

FUNDAMENTAL FORECAST FOR CNH: Neutral

  • Trade war tensions have resumed, adding downward pressure on the Yuan.
  • The USD/CNH breaking above 6.90 will need a green light from the PBOC.
  • MSCI’s phase-two inclusion and a new trading link may ease some selling in Chinese stocks.

How to trade news??Learn with DailyFX Free Trading Guides!

The Chinese Yuan resumed losses against the U.S. Dollar this week after two consecutive gains; it also fell against most other major currencies. Despite of the losses, both the offshore USD/CNH and onshore USD/CNY have held below 6.90, a key level that the PBOC defended recently. Looking forward, resumed tensions in US-China trade war and the PBOC’s guidance will be the two top drivers to the Yuan.

US-China Trade War & August Trade Report

US President Trump told that he wanted to impose tariffs on another $200 billion Chinese goods; the public-comment period for the proposal may start as soon as next week. China’s Foreign Affairs Ministry responded that US threats “will not make China surrender”. The trade war theme has been a key driver to the Chinese Yuan. If the Trump administration releases the detailed plan on new tariffs next week, the Yuan could bear increasing pressure once again.

On the coming Saturday, China will release the trade prints for August. This will further reveal the impact of the trade war to China and the U.S. Both may begin to feel the pain from the tariff battles. According to Bloomberg’s forecasts, China’s exports will slow down to 9.3% in August from 12.2% in July; imports will drop to 18.7% from 27.3% over the same span of time. Also, it seems the battles will not end soon: last week, the two sides met in Washington but failed to make any meaningful progress.

PBOC’s Guidance

The Yuan will bear increasing pressure as discussed above, but whether it can break and hold above 6.90 will still be largely impacted by China’s Central Bank. The regulator set the daily reference rate to be 6.8246 on Friday, after Trump’s new tariff proposal was reported; there is still some room below 6.90. Since August, the PBOC has resumed the “counter-cyclical factor”, which is used to counter against excessive Yuan selling driven by momentum.

Chinese Stocks & MSCI Inclusion Phase Two

The elevated trade tensions seem to have a greater impact to Chinese equities. Shanghai Composite Index extended losses on Friday and closed weaker than last week. At the same time, there is some good news for Chinese stocks as well: on the coming Monday, MSCI will add the second tranche of Chinese stocks to its emerging market index; also, the weighting of total Chinese shares in the index will be increased to 0.75% from 0.39% in June. The increased proportion is expected to bring in $11 billion capitals to China’s stock market.

In addition, China’s securities regulator announced a plan to introduce Shanghai-London Stock Connect this year, which will allow investors in one market to purchase stocks in the other. This will further facilitate overseas investors to participant in China’s stock market and may help to increase interests in Yuan-denominated stocks.

-- Written by Renee Mu, Currency Analyst with DailyFX

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

DISCLOSURES

News & Analysis at your fingertips.