USD/CNH retraces from record high amid US-China trade war

USD/CNH surged to the record high at the week’s start as trade war weighed on the US Dollar (USD) and commodity-linked currencies.
Risk aversion remains in play amid trade war, Hong Kong issues joining PBOC’s preference for weaker Chinese Yuan (CNY).

Anil Panchal FXStreet

USD/CNH fails to hold on to early-day recovery to the fresh record high of 7.1838 as it declines to 7.1590 by the press time of Asian session on Monday.

Updates from the Jackson Hole Symposium failed to supersede the US-China trade war as both the global powerhouses announced fresh tariffs on each others’ goods on Friday. China levied $75 billion of the US goods, with autos bearing 25% tariffs and the rests ranging between 5% and 10%.

In response, the US President Trump mentioned that 10% levy on $300 billion of Chinese goods would be raised to 15% from September 01, for some cases it is December 15, and the existing 25% levy on $250 billion of Chinese goods would rise to 30% from October 01.

Also, Chinese media’s comments over President Trump’s “regret” pushed him to urge the US companies to leave the dragon nation while also saying that he regrets not levying higher tariffs.

On early Monday, news was also live, via China’s Xinhua, that the dragon nation is close to Hong Kong intervention, an issue the US doesn’t prefer.

That said, the US treasury yields are making the rounds to multi-year lows as markets turn risk-averse.

Adding to the pair’s upside could be the People’s Bank of China’s (PBOC) sustained preference for a weaker reference rate for the onshore Yuan rate to 7.0570 versus Friday’s 7.0572.

Technical Analysis

Unless breaking 50-day exponential moving average (EMA) near 7.000, any downside can only be termed as a pullback.

1. R3 7.2104
2. R2 7.1746
3. R1 7.1549
PP 7.1191
1. S1 7.0994
2. S2 7.0636
3. S3 7.0439

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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