USD/CNH: Focus shifts to China – ING

After a week when FX markets were very much dominated by events in Europe, focus this weeks shift to China. Chinese retaliatory trade measures against US agricultural goods have come into effect and markets expect to see more focus on how high USD/CNH trades ahead of reciprocal US tariffs coming in next month, ING's FX analyst Chris Turner notes.

Markets expect to see more focus on how high USD/CNH trades

"Overnight, China went through with its retaliatory tariffs against US agricultural goods, and this Wednesday sees US tariffs go into effect on steel and aluminum imports. Hanging over the market remains the threat of extensive 'reciprocal' US trade tariffs coming in next month as Washington seeks to level the playing field for trade (and raise some much needed revenue for the domestic agenda)." 

"And after all the focus last week on Europe, this week we think the market will watch the USD/CNH top-side as the market will again question whether Chinese authorities, suffering weak growth and deflation, have any greater tolerance for a weaker renminbi. We think not, but that may not prevent USD/CNH from being bought through 7.30."