FOREX-Offshore Chinese yuan pares back gains as enthusiasm from tariffs delay wanes

* Chinese yuan weak after one-week jump the day before
* Japanese yen retraces losses to trade higher
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, Aug 14 (Reuters) - The offshore Chinese yuan
offloaded on Wednesday the gains it made the day before on the
back of the announcement that the United States will delay the
recently announced tariffs on Chinese imports until later this
year.
The fall in the yuan mirrored analysts' views that the delay
in tariffs, although a positive step, wasn't even close to
resolving the US-China trade war. A strengthening of the
Japanese yen on Wednesday also reinforced these views and showed
that risk appetite hasn't fully made a comeback to the financial
markets.
Weaker-than-expected Chinese economic data contributed to
yuan falls. China's closely watched industrial output rose in
July at the slowest pace in more than 17 years.
"The lack of visibility on trade war outlook means that
yesterday's price action (rise in yuan, fall in yen) is unlikely
to translate into a long-lasting trend," said ING analysts in a
note to clients. "One should not get carried away," they said.
The offshore yuan jumped to a one-week high against the
dollar on Tuesday after U.S. President Donald Trump backed off
his Sept. 1 deadline for 10% tariffs on remaining Chinese
imports, delaying duties on cellphones, laptops and other
consumer goods. The announcement was made following renewed
trade discussions between U.S. and Chinese officials.
On Wednesday, however, the yuan was down by 0.4% versus the
greenback at 7.0360 CNH=EBS , staying below the psychological
level it breached last week when the 10% tariffs were announced.
On Wednesday, China had fixed the onshore yuan at 7.03, "the
only sign so far of China making any concessions" to the United
States, said Esther Reichelt, an analyst at Commerzbank.
The Japanese yen was last up by 0.4% against the dollar at
106.33 JPY=EBS , having reached a one-week low the day prior to
that.
"The mid-term trend is for yen gains, because the United
States has not changed its tough stance on China," said Shuntaro
Ikeshima, chief manager of forex and financial products trading
at Mitsubishi UFJ Trust and Banking Co.
"There was a lot of short-covering overnight, but in Asia
the market quickly ran into real demand to buy yen. Once you
added the Chinese data, this managed to keep the yen firm."
Elsewhere in the foreign exchange market, major currencies
were little changed Wednesday morning.
The euro was flat at $1.1180 EUR=EBS despite weaker
second-quarter German gross domestic product data as the
quarter-on-quarter contraction was largely expected. Moreover,
the year-on-year figure was higher than economists polled by
Reuters predicted.
Traders are waiting for the first estimate of eurozone GDP
data, due at 0900 GMT. A Reuters poll forecasts that
second-quarter GDP growth remained unchanged at 0.2%
quarter-on-quarter and at 1.1% year-on-year.
Sterling was also steady, last flat at $1.2056 GBP=D3 , and
little changed against the euro at 92.73 pence EURGBP=D3 .
However, current levels suggest investors aren't willing to take
the pound away from the multi-year lows it reached last week.
Traders are also awaiting inflation data in the UK at 0830
GMT, which is expected to decline slightly in July to 1.9%
year-on-year from the 2% seen in June.

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Yuan ticks lower https://tmsnrt.rs/2YNVA6s
China industrial output https://tmsnrt.rs/2YOpAiC
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