FX.co ★ Offshore Yuan Holds Ground Amid Trade Talks

The offshore yuan steadied at approximately 7.18 per dollar on Tuesday, after enduring losses over the previous two sessions. This stabilization coincides with the ongoing US-China trade negotiations, now in their second day. Market participants are closely monitoring these discussions, particularly to see if the recent indicators of reduced tensions might result in a postponement of the planned tariffs. US officials are keen to pivot the talks toward long-term issues, especially as the August 12 deadline approaches. These discussions might also lay the groundwork for a potential meeting between Presidents Trump and Xi later in the year and could alleviate pressures in industries such as semiconductors and rare earths. In other developments, markets were buoyed by the announcement of a trade agreement between the US and the EU, which institutes a 15% tariff on EU goods—significantly lower than previously threatened levels. This deal mirrors a recent agreement with Japan. Nonetheless, experts suggest that the momentum from Trump’s recent trade agreements may have a limited effect on the negotiations with China, given China's bargaining power, its readiness to counteract, and US resistance to Chinese investments, which are seen as substantial challenges.