According to Iris Pang, economist at ING, Chinese yuan is more of a political tool in the trade war than an economic tool, which is confirmed with today’s disappointing set of Chinese data.
“Even though the data slowed unexpectedly, the USD/CNY fell slightly. In other words, the yuan has appreciated from yesterday’s 6.8758 to the spot of 6.8726 (12:06 Hong Kong Time). The slight yuan appreciation is probably coming from the US’s more optimistic tone on the trade negotiations.”
“We believe that both USD/CNY and USD/CNH will continue to move in tandem with sentiment on the trade war. If China and the US meet in the forthcoming G20 meeting in June then the yuan should appreciate back to the 6.75 level. Ahead of that, however, expect volatility to be high.”