- 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.
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
- R3 7.2951
- R2 7.206
- R1 7.1524
- PP 7.0634
- S1 7.0098
- S2 6.9207
- S3 6.8671
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