The next cue for China's battered yuan may come from U.S. President-elect Donald Trump's press conference on Wednesday as the market looks for more clarity on trade policy. The mainland's currency has recently become a source of political tension with the U.S., with President-elect Trump vowing during his campaign to label the country a currency manipulator for the purposes of a competitive trade advantage and threatening to impose a tariff of as much as 45 percent on China's exports to the U.S. Trump has said that he will hold a press conference on January 11, his first since July. A previously scheduled press conference in December was cancelled. He is widely expected to be asked about trade issues and analysts have pointed to a higher level of uncertainty than would usually be seen in a U.S. administration change.

A customer holds a 100 Yuan note at a market in Beijing. Jason Lee | Reuters

In the wake of the surprise Trump win, fell to nearly eight year lows against the dollar, touching its weakest since at least January 2009, during the global financial crisis. But analysts attributed the slide primarily to the strength of the dollar, with , which measures the greenback against a basket of currencies, surging to a 14-year high after the election. Indeed, some analysts had noted that, based on currency movements within the yuan's trade-weighted basket, policymakers appeared to be supporting the Chinese currency somewhat. The past week has been a turbulent one for the Chinese currency, which first weakened against, then unexpectedly climbed, squeezing short sellers, before retracing gains. Many analysts viewed the currency's surprise bump higher as just a hiccup as it moves toward further, mild depreciation as the dollar strengthens and mainland policymakers aim for yuan stability against the trade-weighted basket.

But analysts pointed to risks from Trump's potential policy tilt. "A more protectionist tilt in U.S. trade policy could trigger a trade war. This in turn could result in bigger-than-expected renminbi depreciation," Sim Moh Siong, senior currency strategist at Bank of Singapore, said in a note on Tuesday. "Increased protectionism is not our base case. But the risk of it occurring is meaningful," Sim said. In a report last week, the Bank of Singapore noted that starting a trade war risked a global recession, especially as China "is not a good candidate to be bullied." Sim estimated the dollar/yuan pair would rise to 7.20 by the end of 2017, compared with the pair trading around 6.9238 in onshore trade on Tuesday. Others also noted the possibility the yuan could tumble based on Trump's comments at the press conference.