Chinese Yuan weakened notably last week as the dispute with US over “spy balloons” continued. The meeting between US Secretary of State Antony Blinken and China’s top diplomat Wang Yi in Munich yielded no results.
In a separate statement, China warned “If the U.S. insists on taking advantage of the (spy balloon) issue, escalating the hype, and expanding the situation, China will follow through to the end, and the U.S. will bear all the consequences.”
In an interview with NBC, Blinken said “there was no apology” from China. “I told him quite simply that that was unacceptable and can never happen again,” he said.
USD/CNH’s down leg from 7.3745 should have completed at 6.6971. Further rebound should be seen to 38.2% retracement of 7.3745 to 6.6971 at 6.9559. Reaction from there would reveal whether USD/CNH is heading for another down leg through 6.6971, or stronger rise to 61.8% retracement at 7.1157.
