USD/CNH: Yuan hits fresh record low in offshore markets

Offshore Yuan (CNH) fell to a new lifetime low of 7.14 earlier today.
China has weaponized Yuan, the US designates China as a currency manipulator.

Omkar Godbole FXStreet Contributor

China's offshore Yuan exchange rate (CNH) fell to fresh record lows earlier today, having traded through 7 per US Dollar on Monday.

The USD/CNH pair is currently trading at 7.12, having hit a high of 7.14 a few minutes before press time.

The People's Bank of China allowed the USD/CNH pair to rise above the major psychological level of 7.00 yesterday, effectively weaponizing the exchange rate.

In response, the US Treasury has labeled China a currency manipulator, boosting the prospect of a full-blown currency war between the US and China. President Trump may put pressure on the Federal Reserve (Fed) to deliver additional rate cuts before the year-end.

The central bank cut rates by 25 basis points last Wednesday but refrained from signaling further easing, leaving President Trump disappointed.

A day later Trump abruptly announced that the US will impose an additional 10% tariff on $300 billion worth of Chinese goods from Sept. 1.

Apart from allowing the Yuan to depreciate below 7 per US Dollar, China has also asked state buyers to halt purchases of US agricultural products.

With escalating trade tensions leading to currency wars, safe-haven assets like Gold and Japanese Yen could find love.

USD/CNH pivot levels

1. R3 7.2951
2. R2 7.206
3. R1 7.1524
PP 7.0634
1. S1 7.0098
2. S2 6.9207
3. S3 6.8671

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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