Yuan, Aussie Dollar Slip as U.S. Tariffs on Chinese Goods Near
The Chinese yuan fell, while the Aussie dollar also slipped on Friday as traders remained anxious over reports that the Trump administration could place tariffs on an additional $200 billion worth of Chinese goods as soon as today. China's commerce ministry has said the country would retaliate if the U.S. imposes new tariffs.
The USD/CNY pair rose 0.07% to 6.8413 by 11:46PM ET (03:46 GMT) as the pair has now fallen for 11 straight weeks.
"In a scenario where there is an immediate lift in tariffs, say closer to 20 percent rather than 10 percent along with threats of more to come, then we suspect the 7 CNY barrier is more likely than not to be breached," said Rodrigo Catril, senior currency strategist at National Australia Bank, referring to a common shorthand for the yuan. "For now we are leaning towards the softer scenario which allows for CNY to trade sub 7."
CNBC reported this week that China’s top leaders are prepared let its currency weaken in order to support its exporters amid escalating trade dispute with the U.S., although Beijing would try to avoid depreciation in the USD/CNY pair beyond the key 7 level.
The U.S. dollar/yuan exchange rate "may well be capped around current levels just above 6.80, ahead of the October half-year review of FX practices by the U.S. Treasury," said Koon How Heng, head of markets strategy at UOB. "But the bias for the medium term remains that of [yuan] weakness as long as there is no clear resolution of U.S.-China trade conflict."
Meanwhile, the AUD/USD pair slid 0.5% to 0.7163. The Aussie dollar slumped 3% in the past month, and this week dropped to 71.45 U.S. cents, the lowest since May 2016.
Elsewhere, the USD/JPY pair slipped over reports that U.S. President Donald Trump hinted that he may take trade fights to Japan next.
Citing a phone call with Trump, The Wall Street Journal reported that the U.S. President "described his good relations with the Japanese leadership but then added: 'Of course that will end as soon as I tell them how much they have to pay.'"