The offshore Chinese yuan remains weak against the U.S. dollar due to renewed trade tensions between China and the U.S. Following two sessions of a modest rebound, market concerns were reignited as China's retaliatory tariffs created further uncertainty over the currency's stability. The yuan's depreciation might offer short-term benefits for exports but risks a dampened investor sentiment and potential capital outflows. Furthermore, traders are cautious about bond markets, fearing volatility as they seek safe-haven assets amidst a looming economic slowdown and potential monetary policy adjustments.
The offshore Chinese yuan remained subdued after two sessions of rebound against the U.S. dollar, as renewed trade tensions between China and the U.S. weighed on market sentiment.
The yuan's weakness, while offering short-term export support, could dampen investor sentiment and raise concerns about capital outflows, prolonging downside risks unless trade tensions ease.
While the Chinese central bank's daily fixing aimed to anchor expectations, trade tensions risks continue to weigh heavily on the Chinese currency.
As a result, yields could see some volatility if investors flee Chinese assets. However, yields could remain under pressure if the impact of the tariffs leads to more stimulus and monetary policy changes.
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