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USD/CNH: Offshore Yuan slides to lowest since January 2017

  • USD/CNH rises to the highest level in 2.5-years.
  • Escalating Sino-US trade tensions are hurting China’s offshore Yuan.

China’s offshore Yuan has dropped to its lowest level since January 2017 and appears on track to test the symbolic level of 7 per US Dollar, courtesy of trade tensions.

The USD/CNH pair rose to 6.9865 earlier today, the highest level since January 2017. Back then, the pair had hit a high of 6.9876.

The US President Donald Trump abruptly decided on Thursday to slap 10% tariffs on $300 billion worth of Chinese goods, ending a month-long trade truce.

As a result, the USD/CNH pair rose from 6.8940 to 6.9677 on Thursday and extended gains further to 6.98 on Friday.

With the new US tariffs set to take effect on Sept. 1, China has vowed to fight back. “China won’t accept any maximum pressure, threat, or blackmailing, and won’t compromise at all on major principle matters,” Foreign Ministry Spokeswoman Hua Chunying said on Friday.

The escalating trade tensions could end up pushing USD/CNH above 7.00.

As of writing, the pair is trading at 6.9775.

Pivot levels

 

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