China mulls tariff response to US hike – ING

Markets are watching closely as China weighs a response to the latest US tariff hike. With limited trade impact, the focus shifts to potential currency movements and consumer strain, ING’s FX analyst Chris Turner notes.

Yuan under pressure amid retaliation risks

Let's also look out today for whether China is set to retaliate again to Washington's latest hike in China tariffs to 125%. Our Greater China economist, Lynn Song, makes the great point that we've probably reached the point where tariffs no longer have any impact on trade decisions and only hit the consumer with inelastic demand. For reference, the onshore USD/CNY is currently pressing the +2% band around the daily fix and USD/CNH could head back to 7.42 if China does announce new tariffs today.