China Announces Countermeasures Against U.S. Tariff Hikes.

The Chinese yuan has slightly rebounded, supported by a weakening U.S. dollar, as markets assess the escalating trade war between China and the United States. China announced that it would raise tariffs on U.S. goods to 84% in retaliation for the U.S. tariff increases, while the U.S. decided to raise import tariffs on Chinese goods to 125%. As a result, the Chinese government has had to restrict the export of domestic products to pressure the U.S. economy. Meanwhile, the People's Bank of China is expected to allow the yuan to weaken further to boost the competitiveness of its exports.

China’s Ministry of Commerce revealed on Thursday that China had announced a firm plan to counter President Trump's administration’s tariffs on Chinese goods, aiming to protect its own interests. Chinese authorities called for fairer negotiations, viewing the U.S. tariffs as a violation of international trade rules and unilateral bullying. They further argued that the tariff hikes would not solve U.S. economic problems but would instead have negative effects on both the U.S. economy and the global supply chain, emphasizing that there would be no winners in a trade war.

China signaled it could lower borrowing costs and ease various requirements to mitigate the economic impact of Trump’s tariff hikes. It is expected that the reserve requirement ratio and policy interest rates may be adjusted at any time. Additionally, China plans to widen its fiscal deficit, issue bonds, and increase special debt to counter the latest tariff measures. Measures could also extend to controlling the export of rare earth minerals to exert more pressure on the U.S. economy.

China has launched its first green government bonds, aiming to raise up to 6 billion yuan. These bonds have maturities of 3 and 5 years, with yields of 2.3% and 2.35% respectively, and may be priced soon. The bond issuance reflects China's efforts to strengthen financial ties with the United Kingdom and aligns with its strategy of offering bonds abroad to forge alliances with countries like Saudi Arabia and France.

The yield on China's 10-year government bonds fell to 1.63%, the lowest in nearly two months, as investors sought safe-haven assets amid rising trade tensions and increased expectations of policy easing. The rapid increase in U.S. tariffs has disrupted about 54% of Chinese exports to the U.S., while China has imposed retaliatory tariffs on U.S. goods. These moves have heightened market concerns about the economic impact and increased expectations that China will roll out more economic stimulus measures and expand its fiscal deficit to boost domestic economic growth.

Techical analysis data (5H)

Resistance: 7.2829, 7.2881, 7.2919

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.2701 - 7.2739 but cannot break the support at 7.2739, you may set a TP at approximately 7.2881 and SL at around 7.2649 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.2829 - 7.2881, you may set a TP at approximately 7.2919 and SL at around 7.2701 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.2829 - 7.2881 but cannot break the resistance at 7.2829, you may set a TP at approximately 7.2701 and SL at around 7.2919 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.2701 - 7.2739, you may set a TP at approximately 7.2649 and SL at around 7.2881 or according to your acceptable risk.

Pivot point April 10, 2025 08:50 PM. GMT+7