Investing.com investing.com 03 Jan, 2021 07:45 am

Will U.S.-China Relations Continue To Deteriorate In 2021?

Will U.S.-China Relations Continue To Deteriorate In 2021?
Forex Analysis by Matthew Weller covering: USD/CNY, US Dollar Index Futures, USD/CNH. Read Matthew Weller's latest article on Investing.com

Perhaps the biggest factor impacting trade volume between the two nations will be the USD/CNH exchange rate itself.p While these geopolitical narratives will certainly have a major impact on relations and trade between the US and China in years to come, perhaps the biggest factor impacting trade volume between the two nations will be the exchange rate itself.As we’ve seen over the past four years, the US-China exchange rate can serve as a real-time indicator of the international tensions between the US and China, so USD/CNH will be one of the most important markets to watch into 2021 and beyond.While the Trump administration was particularly aggressive and bellicose toward the Middle Kingdom, his actions were reflective of a populace with generally unfavorable views of China.

Unfavorable Views Of China Reach New Highs Crucially, this skeptical view toward China was shared by both parties, suggesting that a Biden presidency may not usher in a golden age of cooperation between the two countries.Moving forward, Chinese authorities may still look to slow the renminbi’s appreciation as one of many international negotiating levers, but as long as China’s currency remains relatively strong, it may reduce the urgency for US authorities to increase economic pressure on the Middle Kingdom.

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