USD/CNY Climbs Back Above 7 As Trump Reveals US-China Trade Deal Not a Priority

The Chinese yuan is holding steady at the end of the trading week, despite President Donald Trump revealing that the second phase of a US-China trade agreement is no longer a top priority. The president told reporters aboard the Air Force One that the relationship between the world’s two largest economies is “severely damaged” after the coronavirus pandemic. The yuan climbed back above the key 7 threshold after his comments, but declines were limited.

Is phase two of a trade deal between Washington and Beijing off? The president revealed to the press on his way to Florida that he is not even thinking about it and that he had other subjects on his mind. While the first phase was signed in January, there had been a lot of speculation over the integrity of that pact since the White House has largely blamed China for not containing COVID-19.

They could have stopped the plague. They could have stopped it. They didn’t stop it.

This comes a month after he revealed that he was “very torn” about whether to ditch the first phase. Officials in his administration quickly assured the press that both nations are still expected to meet the provisions inside the deal. Many reports suggest that Beijing has been falling behind on its phase-one commitments. However, experts do anticipate the country will honor the deal in the second half of 2020 during its rebound.
US markets have reacted slightly to the news as the leading indexes pulled back slightly on the president’s remarks.
Meanwhile, on the data front, Chinese automobile sales rose at an annualized rate of 11.6% in June, down from the 14.5% gain in May. The inflation rate dipped 0.1% last month, up from the 0.8% drop in May. The producer price index (PPI) tumbled 3% year-over-year in June.
Earlier this week, the People’s Bank of China (PBoC) said that foreign exchange reserves rose to $3.112 trillion last month, meeting analysts’ projections.
The USD/CNY currency pair jumped 0.11% to 7.0018, from an opening of 6.9941, at 17:00 GMT on Friday. The EUR/CNY climbed 0.24% to 7.9124, from an opening of 7.8925.
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