With corporate America already straining under the weight of a collapse in demand, it seems unlikely that US-China tensions will escalate from threats to higher tariffs in the near term, even if the run-in to the US Presidential election has China in the crosshairs. If the market were morphing into full-blown trade war mode, the would not be eyeing 2900, nor would be trading +$30 in this market climate.
The Yuan Watch
And with all eyes on fix, the PBoC went a long way to extinguishing one major trade war hotspot by setting the Yuan reference rate on a more risk-friendly level. USD/CNH dropped about 200 pips on the stable fix, and a recovery in risk sentiment ensued, and there was no follow-through on US President Trump’s threat to China.
The return of onshore China investors after US-China tensions over recent days failed to elicit fireworks in USD/CNH and China equities. was fixed only 0.17% higher at 7.0690, with USD/CNH attempting to bridge the gap and selling off…