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

Tuesday,   12-Feb-2019   11:49 AM (IST)

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%.