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by The offshore yuan stayed close to $7.12 (USD/CNH) but continues to face pressure due to its rising strength. This is mostly because the latest US inflation report has made traders believe that the Federal Reserve will only make a small cut to interest rates.
The report showed that overall inflation in the US slowed as expected in August. However, core inflation, which excludes things like food and energy, was slightly higher than predicted.
USDCNH Analysis – 12-September-2024
US Presidential Debate Eases Tensions for China
The outcome of the first US presidential debate slightly boosted the yuan, but the results lessened Trump’s chances of winning the presidency.
A lower chance of Trump being re-elected reduced the fear of new tariffs on Chinese goods, which helped calm the market. Traders felt more positive as the risk of harsh trade measures seemed to decrease.
China’s Trade Surplus Grows in August
China’s trade data for August provided some relief as the trade surplus grew. Exports performed better than expected, while imports were lower than forecasts.
One reason for China’s lower import numbers is the weak domestic demand. Still, the better export results helped balance the shortfall in imports, leading to a broader trade surplus.
Focus Shifts to Key Chinese Economic Data
Looking ahead, traders eagerly await important data from China, which will be released on Saturday. This includes figures on industrial production, retail sales, and unemployment.
These numbers will be closely watched as they will offer more insights into the health of China’s economy.
Conclusion
In summary, while the yuan remains under pressure from a strong US dollar, certain factors provide some relief. A less likely Trump presidency and China’s growing trade surplus are positive signs, but much will depend on the upcoming domestic data.
Traders are keenly watching the developments to understand China’s economic outlook better.
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