US President Trump was crossing the wires saying that China is ’playing around’ with monetary policy, as he continues to make accusations that other nations and regions have manipulated their currencies to gain “unfair” competitive advantages.

The recent comment comes following prior comments where Trump has said that the U.S. needs a “fair playing field” against China’s weaker currency, which is nullifying the impact of tariffs.
Trump has said before that China’s president essentially heads the Chinese “Fed” and can directly impact monetary policy.

When looking to the yuan, it has weakened significantly since the end of June, just as the Fed has rubberstamped a rate cut for this month which has been weighing on the greenback. USD/CNH currently stands at 6.8789 vs the Dec 2016 high of 6.9861.

In every respect, it looks like the U.S. is on the verge of sparking a currency war while the trade war with China doesn't seem to be going Trump's way. Indeed, one could argue that the Federal Reserve has been yielding to pressure from the White House with its policy.

USD/CNH levels