The yuan rose while the safe-haven yen fell on Tuesday in Asia as trade tensions between the U.S. and China eased.
The USD/CNY pair fell 0.3% to 6.8743 by 11:45 PM ET (03:45 GMT).
Just two days before the signing of the phase one trade deal, the Trump administration announced that it was removing China from its designation as a currency manipulator. However, China remained on a monitoring list for foreign-exchange practices.
The administration praised China for making “enforceable commitments” not to devalue the yuan. The Chinese currency has now recouped about a third of the losses it sustained against the dollar since mid-June 2018.
“The yuan’s outperformance since last week has reflected the improving risk sentiment, thanks to signs of the economy bottoming out,” said Tommy Xie, an economist at Oversea-Chinese Banking. “There’s some speculation that China may get a better trade deal than expected.”
Chinese Vice Premier Liu He is expected to seal the partial trade deal with the U.S. in Washington on Wednesday.
On the data front, China’s exports and imports both rose in 2019, according to the General Administration of Customs.
In yuan terms, 2019 exports rose 5% from a year ago while imports 1.6% in the same period.
Meanwhile, the safe-haven yen dropped against the U.S. dollar as investor sentiment improved following the trade news.
The yen weakened past 100 per U.S. dollar for the first time in almost months earlier in the day.
“The dollar-yen rose to 110 amid improved risk sentiment and technical momentum,” said Kumiko Ishikawa, currency analyst at Sony Financial Holdings Inc. in a Bloomberg report. “Whether it will extend its advance further depends on fresh catalysts including U.S. data and the extent of rise in U.S. yields.”
Easing U.S.-Iran tensions were also cited as a headwind for the Japanese currency.
The U.S. Dollar Index edged up 0.1% to 97.105.
The AUD/USD pair and the NZD/USD pair both inched down 0.1%. (investing)