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How rumours of a Trump-Xi trade deal cloud the yuan outlook

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US President Donald Trump must have decided that this week’s midterm elections needed a jolt of good news – hence his tweet last Thursday that he had a “very good conversation” on trade with Chinese President Xi Jinping. In the meantime, China is also eager to de-escalate the trade conflict with the United States as its economy seems to cool further. China is hosting its first International Import Expo in Shanghai this week, a demonstration of its willingness to shrink its trade surplus by importing more goods and opening its domestic market.

While few believe that trade tensions between the US and China will totally dissipate in the near future, this “good conversation” came at a perfect time. It forms a solid basis for a meeting between the two leaders at the G20 summit at the end of the month. There is talk that Trump has asked his cabinet to draft a trade deal with China, though the White House has dismissed it. Still, the Chinese yuan has recovered, following the positive developments, and the yuan/dollar rate has strengthened to around 6.9, a safer distance........

© South China Morning Post