Forex - Yuan Edges Up on Trump’s Positive Comments on Trade, U.S. Dollar Flat

12 Feb 2019

Forex - Yuan Edges Up on Trump’s Positive Comments on Trade, U.S. Dollar Flat

The yuan traded slightly higher on Tuesday in Asia as U.S. President Donald Trump’s positive comments on trade put a bid under the Chinese currency.

On Monday, Trump said in Texas that his administration is seeking “great deals on trade” and does not want China to have a hard time.

Comments by White House adviser Kellyanne Conway, in which he said Trump wants to meet with Chinese President Xi “very soon” also lifted investor sentiment.

A new round of trade negotiations kicked off in Beijing this week as the world’s two largest economies try to reach a deal before a March 1 deadline of tariff hikes.

Preparatory talks began on Monday ahead of Thursday and Friday's higher principal-level discussions led on the US side by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, who will meet Chinese Vice-Premier Liu He.

The People's Bank of China (PBOC) set the yuan reference rate at 6.7765 vs Monday's fix of 6.7495.

The USD/CNY pair dropped 0.1% to 6.7862 by 12:18 AM ET (05:18 GMT).

The Australian dollar, the Chinese proxy, also rose 0.2% against the U.S. dollar.

The Aussie dollar’s gain came despite data earlier in the day showed the country’s home loan dropped 6.1%, a big miss compared to the expected 2% fall.

The U.S. dollar index that tracks the greenback against a basket of other currencies were little changed at 96.877. The dollar index hit two-month highs on the previous day, with weakness in the pound and uncertainty surrounding the Sino-U.S trade tensions cited as supporting safe-haven assets.

The GBP/USD pair fell close to 1% on Monday following data showing the U.K. economy grew just 0.2% in fourth quarter last year, well below the 0.6% posted for the third quarter and missing expectations for a 0.3% increase.

The pair last traded at 1.2863 on Tuesday, up 0.1%.

Elsewhere, the USD/JPY pair gained 0.2% to 11.53. The weaker yen was cited as a catalyst for the buying in Japanese stocks today. The Nikkei 225 last traded at 20,849.50, up 2.5%.

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