FX.co ★ Offshore Yuan Holds Ground as Trade Talks Advance

The offshore yuan held steady at approximately 7.18 per dollar on Tuesday as markets closely monitored developments in the US-China trade talks. Key officials from both nations concluded their initial round of discussions in London, which were characterized as "productive." These talks are centered on reducing friction related to technology shipments and rare earth elements and are slated to resume on Tuesday morning. The negotiations are taking place at a pivotal moment for China, which is grappling with significant economic challenges such as ongoing deflation and deteriorating trade dynamics. Recent data indicated a decline in consumer prices for the fourth consecutive month, while producer prices experienced deflation at a rate not seen in two years. Concurrently, trade statistics revealed a decrease in imports due to subdued demand, alongside a slowdown in export growth to a three-month low in May, attributed to the effects of US tariffs. As a result, the yuan is expected to maintain its stability as markets remain cautious pending any substantial outcomes from the discussions.