Arjen van Dijkhuizen, senior economist at ABN AMRO, suggests that after last year, a 10% depreciation of the yuan versus USD helped to mitigate the impact of US tariffs, but since the recent re-escalation the Chinese authorities have acted to keep yuan weakness contained.

Key Quotes

“The US Treasury has again not declared China a ‘currency manipulator’ in their recent bi-annual report on foreign trade partners’ exchange rate policies. We are still of the view that Beijing will refrain from using a weaker yuan as a weapon in the trade conflict, partly because a sharp CNY depreciation could trigger a surge in capital outflows (as it did back in 2015-16).”

“Still, the risk is increasing that they will allow some more yuan weakness should the US indeed step up tariffs on Chinese imports further. We have revised our USD-CNY forecasts for end 2019 and end 2020 a bit, to 6.90 and 6.70 respectively (both from 6.60).”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD rises above 1.1200 amid some USD weakness

EUR/USD is trading above 1.1200, recovering some of the losses. Earlier, ECB officials expressed concern about global growth President Draghi speaks later. Tension is rising toward the Fed decision.

EUR/USD News

GBP/USD falls to the lowest since January

GBP/USD is trading around 1.2550, the lowest since January. Sterling has been under pressure amid growing uncertainty about Brexit and USD strength.

GBP/USD News

USD/JPY remains directionless above mid-108s on Monday

The USD/JPY pair is struggling to make a decisive move in either direction on Monday as the slightly upbeat market sentiment doesn't allow the safe-haven JPY to gather strength.

USD/JPY News

Gold recovers early lost ground, back above $1240 level

Gold recovered a major part of its early slide and moved to the top end of its daily trading range, above the $1340 region post-US data.

Gold News

Gold: Signs of bullish exhaustion ahead of the Fed

Gold's rally seems to have run its course with signs of bullish exhaustion emerging on technical charts ahead of Wednesday's FOMC (Federal Open Market Committee) rate decision.

Read more

Majors

Cryptocurrencies

Signatures