- USD/CNY shows weak bearish performance.
- Taiwan Semiconductor Manufacturing Corporation to set up shop in Arizona.
- Uncertainty looms over hardware dealings due to trade restrictions.
The USD/CNY kicked off Tuesday’s trading session on weak bearish momentum likely influenced by the ongoing trade war between China and the U.S. the exchange rate has been on a bullish run for the past week, but the escalating trade war seems to be affecting the performance. The Taiwan Semiconductor Manufacturing Corporation (NYSE:TSM) found itself at the trade war crosshairs. The company has plans to construct a plant to make wafers, and it will be based in Arizona.
The U.S already banned U.S-based businesses from doing business with Chinese firm Huawei without a license. This prohibition will also apply to the TSMC, which means that it will not be allowed to sell its wafers to Huawei; unless the two have been cleared to work together by the U.S government.
The Chinese Yuan will likely trade in a narrow range ahead of China’s upcoming parliamentary meeting held annually. The parliamentary meeting is expected to commence on Friday and will likely feature economic stimulus plans, and analysts expect that it an economists expect the Chinese leaders to have a coronavirus relief package on the table.
There are concerns that Chinese economists might underestimate the impact of the coronavirus on the market, and that might lead to inadequate use of a relief package. Another risk that analysts are worried about is that the ongoing trade war may provoke Chinese President Xi Jinping to scrap the deal that he made with the U.S in the first phase of their negotiation.
The U.S President Donald Trump has been aggressively pushing for the trade restrictions agenda, especially intending, to make China pay for the coronavirus. This is one of the main reasons behind the escalated trade war. The U.S dollar has been gaining thanks to its safe haven currency status as investors shy off from riskier assets.