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  • USD/CNH dips below key average on renewed trade optimism.  
  • The US and China have a history of backtracking on positive comments.  

The offshore Yuan (CNH) has picked up a bid, pushing the USD/CNH pair below key support on reports that China and the US have reached a consensus on solving trade issues.  

Xinhua, China’s official news agency, reported that the US and China have agreed to continue phase one negotiations.  

Meanwhile, China’s Commerce Ministry said that Vice Premier Liu He and the US Trade Representative Robert Lighthizer and Treasury Secretary Mnuchin discussed core issues of concern and reached consensus on resolving relevant problems via a phone call.  

The renewed trade optimism is boding well for Yuan and other risky assets. The USD/CNH pair is currently trading just below the 200-hour MA support of 7.0275, having hit a low of 7.0175 soon before press time.  

Meanwhile, the futures on the S&P 500 are now reporting a 0.25% gain. The index futures were flatlined in early Asia.  

Note that trade optimism had faded on Monday with reports stating that two sides are struggling to ink the phase one of the trade deal and the ambitious phase two of the deal may not happen anytime soon.  

The renewed trade optimism may not yield big gains in risky assets. After all, both sides have a history of backtracking on positive comments. Investors, therefore, are likely to remain cautious.  

Technical levels