Bank of China is not ready for War

China: The People's Bank of China reported that its currency and stock market may have another tactic behind the trade-war saga between America and China.

The yuan was credited going softer against the might dollar on Monday after leaping 1% on Friday when PBOC adjusted their mechanics setting up the yuan's official value each day by reintroducing a so-called “countercyclical factor”. One dollar last bought 6.8169 yuan USDCNY, +0.0352%  versus 6.8097 yuan late Friday in New York, according to FactSet.

This model was designed to keep the yuan from falling at a rapid pace against the dollar, thus acting
thus acting countercyclically to market forces. This enables China's currency to be fixed to the U.S. dollar at a midpoint and can move within a defined range from that point.

Meanwhile, reports have mentioned that Shanghai Composite SHCOMP, +0.00% while also supported by stronger U.S. markets late last week, jumped 1.9% to 2,780.90 on Monday, its strongest close since Aug. 9. The trade war continues between the U.S. and China affecting both on the latter's stock and currency.

Read more: China VS America

Stats have reported that as of year-to-date Shanghai Composite is down 16%, making it one of the worst-performing global markets, while the yuan has ceded close to 5% against the dollar in that time frame.

Speculation has arisen that the PBOC could be holding out an olive branch to the U.S. administration with its move to shore up the yuan. President Donald Trump has made no secret that he thinks China is a currency manipulator.

U.S.-China trade talks ended last week with no progress, and some are concerned that tensions could pick up in the coming months. And given the legal worries that have been circling the Trump administration, some are concerned Trump could escalate that trade war in an effort to detract from the headlines.