USD/CNY rose to a high of 6.7994 earlier today
The onshore yuan looks poised for its biggest fall in three years against the dollar, as Trump's tariffs threat over the weekend is spurring a decline in Chinese assets today. BofAML's emerging markets strategist, Rohit Garg, believes that the yuan may approach 7.00 per dollar if the US follows through and levies a 25% tariff on $250 billion worth of Chinese goods.
Garg notes that the firm is of the view that Trump's latest move is "only a negotiating tactic for now" and that they don't see this as "being the end of the road just yet" for trade talks between the two parties. However, he adds a caveat that "the situation is extremely fluid" which carries the undertone that it could develop into an escalation move if trade talks take a turn for the worse.
The tone in Asian markets and emerging markets towards the current trade situation has calmed down somewhat over the past few months but I reckon if tensions start to build up once again, expect there to be spillovers. And in turn, it could promote more flows towards haven assets/currencies in the bigger picture.