FX.co ★ Offshore Yuan Gains on US-China Trade Optimism

The offshore yuan appreciated to approximately 7.23 per dollar on Monday, following a lackluster session on Friday. This positive shift was fueled by optimism surrounding developments in US-China trade discussions, which countered growing domestic deflationary pressures. Two days of high-level negotiations between the United States and China concluded on Sunday afternoon in Geneva, with both parties announcing "substantial progress." US Treasury Secretary Scott Bessent described the discussions as fruitful, while Chinese Vice Premier He Lifeng highlighted the achievement of an "important consensus." Markets are eagerly awaiting the release of a joint statement later today, as it could contain information potentially beneficial to China's export sector. In the meantime, China's April inflation data underscores the country's ongoing economic challenges, with consumer prices declining by 0.1% year-on-year for the third consecutive month and producer prices dropping by 2.7%, marking the steepest decline in six months. These figures signal weak domestic demand and increasing external threats, exacerbated by strained trade relations and sluggish employment conditions.