(Bloomberg) -- China’s yuan strengthened and stocks rebounded, as traders awaited Friday’s U.S. decision on whether it will impose additional tariffs.
The currency climbed as much as 0.23% in offshore trading, following a four-day slide that was its biggest since August. The yuan has already busted through its 200-day-moving average this week, en route to the 6.9 per dollar level that it hasn’t touched all year. While the Shanghai Composite climbed as much as 2.5% on Friday, it’s still on course for a weekly drop of 5.1%.
“Markets will be in a holding pattern as we await the outcome of the meeting," said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group. "If there is a breakdown and the tariffs go up, then we will see a risk-off tone in markets with the offshore yuan heading higher.”
Traders are preparing for the possibility that the Trump administration will raise duties on $200 billion of Chinese goods on Friday to 25 percent from 10 percent. They were caught off guard by the U.S. president’s threats earlier in the week, rushing to protect against further losses in the yuan after the currency suddenly sank the most in more than three years. Overseas investors have been fleeing China stocks at a record pace.
The central bank set the yuan fixing at 6.7912 per dollar, stronger than forecast by analysts and traders surveyed by Bloomberg. Pressure on the yuan came from the country’s banks on Thursday, according to traders, who said their proprietary desks were the most active sellers.
Delegations from the U.S. and China are in Washington for the latest round of talks.
