EBC Markets Briefing | Yuan stays strong ahead China-US summit

The yuan stayed around its strongest level in more than 4 years on Monday as the PBOC continued to guide the currency higher ahead of a meeting between Chinese leader and US president.

Expectations are high that the summit may result in an extension of the bilateral trade truce that will expire in November. Beijing may agree to ramp up buying of the US energy and agriculture products.

AI is set to take centre stage as the global technology race intensifies, with major disputes brewing over access to advanced US chips, safety regulations, and the rapid pace of the industry's growth.

The yuan may also be discussed at the summit. But Beijing is unlikely to tolerate significant appreciation given the country's heavily reliance on exports to keep its economy humming.

China's retail sales growth slowed for a second straight month to just 0.4% in August, marking its weakest performance since consumer spending rebounded. That contrasts against a continually accelerating factory output.

Oil prices in the country hit record highs, as energy disruptions from an escalating Middle East conflict spilled into the world's largest market for imported crude.

EBC Financial Group analyst says that he yuan nearly entered overbought territory, but gave no signs of a trend reversal. The next major resistance level is seen around 6.69 per dollar.

Asset Recap

As of market close on 18 September, among EBC major products, Lam Research shares led gains on the back of a powerful JPMorgan research note projecting a deepening upcycle in wafer fabrication equipment spending.

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Nucor shares dropped after the steelmaker provided a quarterly outlook that missed Wall Street forecasts, despite a substantial rise in US steel prices over the past year.

German stocks hit a fresh one-month low, dragged lower by the major carmakers. A new survey revealed that Eurozone consumers had nudged their 12-month inflation expectations up to 3%.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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