USD/CNY: Official announcement on tariff cuts could support the yuan – HSBC


US and Chinese presidents had their first extensive conversation in six months, discussing bilateral relations. The Wall Street Journal (WSJ) reported that the United States Trade Representative (USTR)  is looking into tariffs on Chinese imports. Economists at HSBC believe an official announcement on tariff cuts could see a knee-jerk response in USD/CNY.

The path towards a trade deal with even partial removal of tariffs could be bumpy

“The WSJ reported on 10 September that the Biden administration is considering launching an investigation into China’s subsidies under Section 301 of the US trade law, which could lead to new tariffs.”

“The article reported that the USTR does not plan to reduce tariffs on more than half of Chinese imports, but it has been looking into which tariffs are hurting the US economy or could substantially raise the costs of other parts of the Biden agenda (e.g. infrastructure building).”

“The path towards a trade deal with even a partial removal of tariffs could be bumpy. Also, the current USD/CNY level is not too far from the 6.35 level when the tariff threat first started in 2Q18. It is also worth noting that the 6.35 level is also the point when the People’s Bank of China raised its reserve requirement ratio for onshore FX deposits in May.”

“An official announcement on tariff cuts could see a knee-jerk response in the CNY; however, thereafter, we believe the market will shift its attention back to the USD bullish factors, including moderating global growth, the Federal Reserve’s tapering, and COVID-19.”

 

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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD remains pressured after US data misses estimates

EUR/USD is trading closer to 1.1750, paring its recovery from earlier in the day as the safe-haven dollar is bid. US Consumer Sentiment missed estimates with 72 points in September. The financial woes of China's Evergrande are weighing on sentiment.

EUR/USD News

GBP/USD trades under 1.38 amid on UK data, dollar strength

GBP/USD is on the back foot, trading under 1.38 after UK Retail Sales figures disappointed with -0.9% in August, worse than expected. Brexit uncertainty and dollar demand weighed on the pair earlier. 

GBP/USD News

XAU/USD surrenders intraday gains, drops closer to $1,750 level

Gold struggled to preserve its intraday gains and dropped to the lower end of the daily trading range during the early North American session. 

Gold News

Experts say Ripple will win SEC lawsuit, which might propel XRP to new all-time highs

The latest development in the ongoing SEC vs. Ripple lawsuit is that documents are classified as privileged and blocked for public viewing. Though institutional investors are yet to take big bets on the altcoin in 2021, retail investors are actively trading in XRP.

Read more

US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Consumer outlook expected to rebound to 72.2 in September. August’s 70.2 was the lowest since December 2011. Inflation and Delta variant wearing on US optimism. Markets face negative dollar risk from fading consumer optimism.

Read more

Forex MAJORS

Cryptocurrencies

Signatures