The offshore yuan weakened beyond 6.71 per dollar on Thursday, its lowest level in nearly three weeks, as a stronger US dollar and uncertainty over the extension of the US-China trade truce weighed on the currency. The greenback remained supported by mounting expectations of further monetary tightening, with markets now assigning roughly a 70% probability to a Federal Reserve rate hike in October, up from 55% just a day earlier.
Additional downward pressure on the yuan came after Treasury Secretary Scott Bessent said the US and China had agreed to prolong their trade truce by two months, through January 10. Beijing has yet to publicly confirm that expiration date, and the announced extension is shorter than the three-to-six-month continuation previously floated by some US officials.
Expectations for the upcoming Trump-Xi summit are muted, but the agenda is expected to center on artificial intelligence, Iran, Taiwan and broader economic relations, as both sides look to maintain stability in their bilateral ties.
