FOREX-Chinese yuan surrenders some gains; yen climbs as growth fears return

Shutterstock photo

* Chinese yuan weak after one-week jump the day before

* Japanese yen retraces losses to trade higher

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds minor changes to context)

By Olga Cotaga

LONDON, Aug 14 (Reuters) - China's offshore yuan gave upsome of its earlier gains on Wednesday as weaker-than-expectedeconomic data tempered the optimism generated by a U.S. decisionto delay tariffs on Chinese imports.

The enthusiasm ebbed more broadly, as well. The safe-havenJapanese yen strengthened again, a sign that risk appetiteremains fragile. The yen fell on Tuesday after the U.S,announcement.

The fall in the yuan and the rise in yen mirrored analysts'views that the delay in tariffs, although encouraging, wasn'teven close to resolving the U.S.-China trade war.

Chinese economic data, meanwhile, showed that the world'ssecond-largest economy continued to slow. Industrial output rosein July at the slowest pace in more than 17 years. urn:newsml:reuters.com:*:nB9N24U02P "The lack of visibility on trade war outlook means thatyesterday's price action (rise in yuan, fall in yen) is unlikelyto translate into a long-lasting trend," ING analysts said,urging clients not to "get carried away".

The offshore yuan had jumped to a one-week high against thedollar on Tuesday after U.S. President Donald Trump backed offhis Sept. 1 deadline for imposing 10% tariffs on remainingChinese imports, delaying duties on cellphones, laptops andother consumer goods. The announcement came after renewed tradediscussions between U.S. and Chinese officials.

But it fell back 0.4% against the dollar to 7.0360 CNH=EBS , still more than 7 to the dollar, the level it reachedlast week when the 10% tariffs were announced.

China fixed the onshore yuan at 7.03, "the only sign so farof China making any concessions" to the United States, saidEsther Reichelt, an analyst at Commerzbank.

The Japanese yen rose 0.4% against the dollar to 106.33 JPY=EBS , up from Tuesday's one-week low point.

"The mid-term trend is for yen gains, because the UnitedStates has not changed its tough stance on China," said ShuntaroIkeshima, chief manager of forex and financial products tradingat Mitsubishi UFJ Trust and Banking Co.

"There was a lot of short-covering overnight, but in Asiathe market quickly ran into real demand to buy yen. Once youadded the Chinese data, this managed to keep the yen firm."

Elsewhere, major currencies were little changed. The dollarindex, which is down around 1% since the start of August, wasflat around 97.8 .DXY . Investors were watching the Treasuryyield curve, which is close to inverting for the first timesince 2007.

An inversion of the curve, when short-dated bonds yield morethan longer-dated, is a recession warning.

The euro was flat at $1.1180EUR=EBS despite weakersecond-quarter German gross domestic product data. Moreover, theyear-on-year figure was higher than economists polled by Reuterspredicted.

Traders are waiting for the first estimate of eurozone GDPdata, due at 0900 GMT. A Reuters poll forecasts thatsecond-quarter GDP growth remained unchanged at 0.2%quarter-on-quarter and at 1.1% year-on-year.

Sterling was also steady, last flat at $1.2056GBP=D3 , andlittle changed against the euro at 92.73 penceEURGBP=D3 .However, current levels suggest investors aren't willing to takethe pound away from the multi-year lows it reached last week.

Yuan ticks lower   https://tmsnrt.rs/2YNVA6sChina industrial output    https://tmsnrt.rs/2YOpAiC
US 2-10 yield curve   https://tmsnrt.rs/2YKMUxT
(Reporting by Olga Cotaga; aditional reporting by StanleyWhite; editing by Larry King) ((olga.cotaga@thomsonreuters.com))

This article appears in: Politics , Stocks , World Markets
Referenced Symbols: EFX ,

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