S&P 500 futures down nearly 1 percent as the Chinese yuan eyes 10-year lows
- The S&P 500 futures are flashing red on fears that the sharp drop in CNY may lead to an escalation of US-China trade war.
- The USD/CNY clocked a high of 6.9642 in Asia - the highest level since January 2017 - and could soon test the major psychological hurdle of 7.00.
The risk aversion in the equity market is set to worsen, courtesy of the slide in the Chinese yuan (CNY).
At press time, the S&P 500 futures are reporting a 1 percent drop, meaning yesterday's 3 percent gains will likely end up being a dead cat bounce.
The risk-off tone in the S&P 500 futures could be associated with fears that the sharp drop in CNY may embolden Trump administration to push for a fourth round of tariff against China.
At press time, the USD/CNY is trading at 6.9614, having clocked a high of 6.9642. The technical charts indicate that the currency pair could soon rise above the January 2017 high of 6.9651 and test the psychological hurdle of 7.00 in the near-term. It is worth noting that the offshore exchange rate (USD/CNH) has already found acceptance above the yearly high of 6.9584.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
