Danske Bank analysts note that the offshore Renminbi weakened a further 0.4% during the US open to 7.082 indicating further capital flight and pessimism regarding the Chinese economy in the face of the US trade war, but then strengthened during the Asia open as the PBOC set a stronger than expected fixing for the onshore Renminbi.

“The fixing will be closely watched over the coming weeks to gauge the intents of the PBOC, but for now Chinese authorities clearly do not want to signal any sort of devaluation. Chinese trade balance figures out this morning showed an increase of 3% y/y, while imports declined 5.6% resulting in a trade surplus of USD45.1bn. Both import and export numbers were significantly better than expected (imports: -9%, exports: -1%). In local currency the trade surplus with the US has expanded 11% since the start of the year.”