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CNH: USD/CNH Back Above 7.3000, As Trump Adds 10% Tariffs On China From March 4

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CNH lost nearly 0.50% versus the USD for Thursday's session. USD/CNH was last just above 7.3000, fresh highs back to Feb 13. US President Trump stated that an additional 10% tariffs would be imposed on China from March 4 (so next Tuesday). USD/CNY spot finished up at 7.2865. The CNY CFETS basket tracker was up slightly to 99.48 (per BBG). CNH losses were slightly under broader USD index gains. The dollar rallied on tariff related concerns, as Trump stated planned tariffs on Canada and Mexico would go into effect on March 4 as planned. 

  • For USD/CNH technicals, we are now back above all key EMAs. The 20 and 50-day points sit close to 7.2800. These could act as support points on any pullback in the pair/  A clean break higher, above 7.3000, could see Feb 12 highs at 7.3247 targeted. Feb 4 highs were at 7.3365.
  • 1 week implied USD/CNH vol has risen, but at 5.22% is still off earlier 2025 highs (above 8% on Jan 20). The 1 month implied level was last at 4.88%, which is closer towards the bottom end of the recent range rather than the top. The 1 month risk reversal is almost back to flat. Early Feb highs were at 0.38.
  • Such a backdrop suggests the market is not expecting a sharp USD/CNH rise, which fits with any yuan depreciation pressures being steady rather than dramatic. Focus will be on today's USD/CNY fixing, with recent trends modestly ticking higher.
  • Of course, there is also scope for a last-minute deal between the US and China to avoid this further tariff hike. Although such odds have arguably been lowered this past week, with the US administration focused on restricting China investment flows/limiting China access to chips, and looking at ship levies as well.
  • The local data calendar is quiet until tomorrow's official PMI prints. 
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CNH lost nearly 0.50% versus the USD for Thursday's session. USD/CNH was last just above 7.3000, fresh highs back to Feb 13. US President Trump stated that an additional 10% tariffs would be imposed on China from March 4 (so next Tuesday). USD/CNY spot finished up at 7.2865. The CNY CFETS basket tracker was up slightly to 99.48 (per BBG). CNH losses were slightly under broader USD index gains. The dollar rallied on tariff related concerns, as Trump stated planned tariffs on Canada and Mexico would go into effect on March 4 as planned. 

  • For USD/CNH technicals, we are now back above all key EMAs. The 20 and 50-day points sit close to 7.2800. These could act as support points on any pullback in the pair/  A clean break higher, above 7.3000, could see Feb 12 highs at 7.3247 targeted. Feb 4 highs were at 7.3365.
  • 1 week implied USD/CNH vol has risen, but at 5.22% is still off earlier 2025 highs (above 8% on Jan 20). The 1 month implied level was last at 4.88%, which is closer towards the bottom end of the recent range rather than the top. The 1 month risk reversal is almost back to flat. Early Feb highs were at 0.38.
  • Such a backdrop suggests the market is not expecting a sharp USD/CNH rise, which fits with any yuan depreciation pressures being steady rather than dramatic. Focus will be on today's USD/CNY fixing, with recent trends modestly ticking higher.
  • Of course, there is also scope for a last-minute deal between the US and China to avoid this further tariff hike. Although such odds have arguably been lowered this past week, with the US administration focused on restricting China investment flows/limiting China access to chips, and looking at ship levies as well.
  • The local data calendar is quiet until tomorrow's official PMI prints.