Yuan Up as US-China Agree To Resume Trade Talks

Yuan Up as US-China Agree To Resume Trade Talks
July 1, 2019


The US-China trade talks that got suspended last month have unexpectedly resumed after President Donald Trump had a one-on-one meeting on Saturday with his counterpart Xi Jinping on the sidelines of the G20 conference in Osaka, Japan. Furthermore, the US President has suspended additional tariffs on imports from China. The news is anticipated to strengthen the yuan in the days to come. On Friday, the USD/CNY declined from a high of 6.8778 to a low of 6.8612, before closing at 6.8682.

On Saturday, the US President described the meeting with the Chinese President as “excellent, as good as it was going to be” and “we’re right back on track.”

Trump also stated that the US and China would reopen discussions to resolve the long-standing trade issue. Furthermore, the US President announced that he would not proceed further with the threats to hike import duties on Chinese goods – “at least for the time being.”

Trump said, “We won’t be adding an additional tremendous amount — we have $350 billion left that could be tariffed, taxed — we’re not going to be doing that.”

The President also revealed that the US firms would be permitted to resume supplying components to the Chinese firm Huawei.

Regarding the permission, Trump said: “A lot of people are surprised we send and we sell to Huawei a tremendous amount of product that goes into a lot of the various things that they make, and I said that that’s OK, that we will keep selling that product.”

Trump, however, warned that he would ink a deal with China only if the US gets a good trade agreement. The President categorically stated that he would not expedite the deal and in turn lose a likely good outcome. “The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good!”

Trump also disclosed that the Chinese had complimented the US decision to stop imposing additional tariffs and easing restrictions on component supply to Huawei by agreeing to purchase large volumes of US agro products.

Trump said: “We’re holding back on tariffs, and they’re going to buy farm products.” “If we make a deal, it will be a very historic event.”

However, the US President stated that the prevailing duties on Chinese imports would not be withdrawn. That means the US-China trade war could still have a negative impact on global economic growth unless the entire issue is resolved amicably.

Still, for the time being, the suspension of additional tariffs on Chinese goods and resumption of trade talks is anticipated to turn the yuan bullish in the short-term.

The USD/CNY price chart shows huge resistance at 6.873 levels. Furthermore, the Chaikin money flow indicator has a negative reading. As a result, we can expect the currency pair to move down in the short-term.

cny - technical analysis - 1st July 2019

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Richard W

Richard W

Richard is the guy who know everything there is about the financial industry, working in a top firm for over 15 years, he will give the lowdown on some of the biggest companies in the world

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