The Chinese yuan rallied against the US dollar today. While the greenback firmed on the reports about a truce in the US-China trade war, the Chinese currency benefited from the news even more. The good news allowed the yuan to ignore negative domestic data.
As was expected, the news about the truce in the trade war between the United States and China had a big impact on markets. The USA promised to not raise tariffs on Chinese goods further and to ease sanctions against Chinese tech giant Huawei. In response, China promised to buy large quantities of US agricultural products. It is important to remember, though, that the truce does not automatically guarantee a trade deal. According to reports, about 90% of issues were resolved, but the remaining 10% is where the two countries have principal differences, which makes it extremely difficult to reach an agreement.
Meanwhile, the Caixin China Manufacturing PMI dropped from 50.2 in May to 49.4 in June, below the consensus forecast of 50.1. Being now below the neutral 50.0 level, the index indicated the first decline of the sector in four months.
USD/CNY dropped 0.35% to 6.8428 as of 12:57 GMT today.
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