USD/CNY likely to face resistance at 6.9 level in the run-up to the G-20 Osaka Summit, says Scotiabank

The USD/CNY currency pair is expected to face resistance at 6.9 level in the run-up to the G-20 Osaka Summit, while the trade relation between the United States and China is seen to worsen further in the next couple of weeks, according to the latest research report from Scotiabank.

US President Donald Trump tweeted on Saturday that it would be wise for China to act now to finish a trade deal or risk facing a worse deal if negotiations continue into a possible second term after the 2020 presidential election.

The US Trade Representative’s Office said in a statement dated 10 May that it has been ordered by the President to begin the process of raising tariffs on essentially all remaining USD300 billion worth of imports from China.

Meanwhile, Chinese Vice Premier Liu He told Chinese media last Friday that the US must remove all extra tariffs, set targets for Chinese purchases of goods in line with real demand, and ensure that the text of the deal is "balanced" to ensure the "dignity" of both nations, if the world’s largest economy wants to reach an agreement with China, the report added.

White House economic adviser Larry Kudlow said in an interview on "Fox News Sunday" that China has invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing to continue trade negotiations.

While the US officials haven’t firmed up plans to travel, President Trump and Chinese President Xi Jinping are likely to talk directly at the G-20 Osaka Summit set for 28-29 June, according to Kudlow.

"The US-China trade standoff has dented market sentiment substantially and will prompt both the Fed and the PBoC to keep their pro-growth stance. We would like to buy CNH/JPY cross at 16.0 now with a target of 16.6 and a stop of 15.6," Scotiabank further commented.