SHANGHAI- The yuan dipped from a four-month high against the dollar on Thursday, underperforming a broader lift in global peers as persistent worries about even more US tariffs against China overshadowed the reprieve granted to Canada and Mexico.
News that the US would give automakers from its North American neighbors some tariff relief and the euro’s unexpected strength pushed the greenback sharply lower against most currencies overnight.
While the onshore yuan firmed to a high of 7.2199 against the dollar on Wednesday, it pulled back on Thursday.
Market participants said the overall sentiment for the yuan remains subdued, despite the overnight gains.
Ken Cheung, FX strategy director at Mizuho, expects the impact from the dollar’s decline on the yuan to be limited.
“The dramatically stable CNY following the rounds of 10 percent US tariff hikes might catch market participants off guard,” said Cheung.
“Trump’s tariff uncertainties are unlikely to dissipate before the start of China-US trade talks, leaving the CNH and CNY spot above the 7.2 handle,” Cheung said.
