Asian shares, FX, steady,

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    Most Asian currencies struggled for direction as the yuan pulled back after hitting a seven-month high against the US dollar, while the Taiwan dollar strengthened on the back of better-than-expected export orders.

    The yuan often tends to set the tone for the region’s emerging markets, for whom China is the largest trading partner.

    The currency, which has profited from the dollar’s weakness since flirting with long-term lows above 7 per dollar in May, strengthened to 6.896 per dollar in onshore trade, its highest since Jan. 22, before paring gains.

    The ringgit, won and Thai baht, which have all mirrored the yuan’s recovery against the dollar in recent months, hovered around flat for the day in response.

    Traders said the yuan and other regional currencies should stay supported as long as US-China talks on their existing Phase 1 trade deal do not deliver another shock.

    “There remain expectations that the rhetoric could heat up on US-China relations, but given the importance of the trade deal to both the US and China, the market is broadly expecting the agreement to stay intact,” said Jingyi Pan, a market strategist at IG Asia.

    South Korean shares staged a sharp rebound, following a more than 3 percent decline in the previous session as a preliminary trade report showed exports in Asia’s fourth-largest economy contracted less in the first 20 days of August than in July.

    Taiwan’s export orders, a bellwether for global technology demand, grew at the strongest pace in two-and-a-half-years in July on strong demand for telecommuting products as the pandemic forced millions of people around the world to stay home.