Yuan continues to strengthen, markets chop into month end

 🇨🇳 China has been resolute in the market-based reform of the yuan & the PBoC has largely ceased regular interventions, so the future rise & fall of the yuan should be determined by the market, said the Securities Times in a front-page commentary $USDCNY $USDCNH

- Shown below 👇🏻 pic.twitter.com/fzQGJgq3lY— Anthony Barton (@ABartonMacro) May 27, 2021 

Therefore, the claims and suggestions that call for the appreciation or devaluation of the RMB exchange rate are inherently contrary to the general direction of exchange rate market reforms.

In the long run, the future rise and fall of the RMB exchange rate should be determined by the market. What the central bank has to do is to guide and counter-cyclically adjust under a few extreme conditions. In this regard, the central bank has accumulated accumulations since the "August 11" exchange rate reform. A lot of experience is gained, and the toolbox is relatively rich.

Many experts have analyzed and pointed out that as the US dollar index enters a weak cycle in the medium and long term, there is room for further appreciation of the RMB against the US dollar. However, regardless of the level of appreciation of the RMB against the US dollar, the increasingly market-oriented RMB exchange rate formation mechanism determines that its future trend will not be smooth, and the two-way fluctuation of the RMB exchange rate will become the norm.

The U.S. is entering a period of intense competition with China as the government running the world’s second-biggest economy becomes ever more tightly controlled by President Xi Jinping, the White House’s top official for Asia said.

“The period that was broadly described as engagement has come to an end,” Kurt Campbell, the U.S. coordinator for Indo-Pacific affairs on the National Security Council, said Wednesday at an event hosted by Stanford University. U.S. policy toward China will now operate under a “new set of strategic parameters,” Campbell said, adding that “the dominant paradigm is going to be competition.”

Chinese policies under Xi are in large part responsible for the shift in U.S. policy, Campbell said, citing military clashes on China’s border with India, an “economic campaign” against Australia and the rise of “wolf warrior” diplomacy. Beijing’s behavior was emblematic of a shift toward “harsh power, or hard power,” which “signals that China is determined to play a more assertive role,” he said.

"During their candid exchange, Ambassador Tai discussed the guiding principles of the Biden-Harris administration’s worker-centered trade policy and her ongoing review of the U.S.-China trade relationship, while also raising issues of concern," the USTR said.

China's commerce ministry described the talks as "a candid, pragmatic and constructive exchange".

"Both sides view the development of bilateral trade as very important. (Both sides) exchanged views on issues of mutual concern and agreed to maintain communication."

Earnings at China's industrial firms grew at a slower pace in April, with high commodity prices and weaker performance in the consumer goods sector limiting overall profitability from manufacturing.

“In our projections, conditional to the economic outlook continuing to unfold as anticipated, about this time next year if not further on we see ourselves in a positive position of being able to start to normalise monetary conditions towards somewhat neutral position,”

 The next few months will be an interesting test for how well the PriceStats methodology works at tracking the US inflation data at a high frequency. Contrary to every anecdote out there, they've been tracking a slowing inflation rate since late-March https://t.co/6tQDV9DcCw pic.twitter.com/kd79gUHBrD— Michael Redmond (@mredmond88) May 26, 2021