Early on Monday, the Chinese yuan continues to trade optimistically against the US dollar, close to four-month highs touched late last week as a result of the confirmation of the phase one trade deal. At the time of writing, USD/CNH is trading at around 6.996.

The Chinese yuan strengthened after the US and China confirmed the phase one deal, which would help increase China’s farm purchases of US products in exchange for suspension of tariff hikes by the US on Chinese imports. The agreement, finalized just before the latest round of tariff hikes kicked in on December 15, will also see China taking steps towards improving IP protection and curbing forced technology transfers.

The Chinese yuan has also been boosted following the release of positive economic data from China. Industrial production grew by 6.2% YoY during November, coming in better than economists’ expectations which were for a 5.0% growth instead and the 4.7% expansion seen in October. In addition, retail sales also grew by 8.0% in November, better than the 7.6% forecast, on the back of strong Singles Day sales.