What Caused USD/CNH to Slide Today?

While the market sentiment lifted after the US called off its decision to hike tariffs on Mexican imports and increasing likelihood of a rate cut by the Fed, the Chinese yuan continued to weaken over ongoing trade tensions between US and China.

At the time of writing, USD/CNH is trading at over 6.95, edging closer to psychological level at 7.00. This is the weakest level for the yuan in 2019. What caused the Chinese yuan to slide lower?

Earlier today, data releases revealed that Chinese imports witnessed the steepest decline in almost three years during the month of May. This points to a sign of weakening domestic demand, a key indicator that reflects possible weakness in the Chinese economy.

Although exports grew by 1.1% YoY in May despite the hiked tariffs coming into effect, they were unable to support the yuan or stop its slide. What’s even more surprising and should have boosted the Chinese yuan is the rise in China’s trade surplus with the US. In May, this figure shot up to $26.89 billion, from $21.01 billion in April and touched a four-month high.

However, with no resolution in sight, the trade war is definitely going to wreak havoc in the Chinese markets.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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