US Treasury designates China as a currency manipulator, USD/JPY declines

“China is a currency manipulator,” says the US Treasury released an official statement released on early Tuesday morning. The statement also includes comments from the Treasury Secretary Steve Mnuchin. After the news, the USD/JPY pair dropped further down to fresh seven-month low of 105.54 by the press time.

Key quotes

• Will engage with the IMF to eliminate unfair competitive advantage by China's actions.
• Says China's actions are a violation of China's G20 commitments to refrain from competitive devaluation.
• Says continues to urge China to enhance the transparency of its exchange rate and reserve management operations and goals.

FX implication

With the news likely increasing political tension between the world’s two largest economies, which are already at loggerheads over trade terms, markets’ rush towards safe-havens could be spotted with rising Japanese Yen (JPY) just after the release.