Yuan inches up as dollar pressured ahead of Fed meeting

SHANGHAI, March 18 (Reuters) - China's yuan inched up
against the dollar on Monday as further signs of receding
economic momentum in the United States suggested the Federal
Reserve could take a distinctly dovish turn at its meeting later
this week.
Downbeat U.S. economic data released on Friday kept the
dollar under pressure, with Li Liuyang, senior foreign exchange
analyst at China Merchants Bank in Shanghai, predicting more
volatility for the greenback in the run up to the Fed meeting.

"The yuan exchange rate will have a directional move
depending on the Fed's decision," Li said.
"If the dollar stabilises or rebounds, the yuan is likely to
pause the current appreciation and trade sideways. But if the
dollar falls, the yuan may rise towards 6.6 per dollar."
Prior to market opening on Monday, the People's Bank of
China (PBOC) set the midpoint rate at 6.7088 per
dollar, 79 pips or 0.12 percent firmer than the previous fix of
6.7167.
In the spot market, the onshore yuan opened at
6.7142 per dollar and was changing hands at 6.7122 at midday, 18
pips firmer than the previous late session close.
The onshore spot yuan traded in a tight range of about 70
pips in morning deals. Traders said the uncertainty around the
timing of a meeting of the leaders of the world's two largest
economies to end the months-long trade war is also keeping the
market on edge.
"While comments from both sides have been positive, there
have been few details on where negotiations stand. The delay
could once again spark anxiety in the market," said Alfonso
Esparza, senior market analyst at OANDA, in a note to clients.
U.S. Treasury Secretary Steven Mnuchin said last week that
both sides were "working in good faith" to try to reach a deal
"as quickly as possible."
The global dollar index fell to 96.485 at midday,
from the previous close of 96.595.
The offshore yuan was trading at 6.7138 per dollar
as of midday.

The yuan market at 0407 GMT:

ONSHORE SPOT:
Item Current Previous Change
PBOC midpoint 6.7088 6.7167 0.12%

Spot yuan 6.7122 6.714 0.03%

Divergence from 0.05%
midpoint*
Spot change YTD 2.40%
Spot change since 2005 23.31%
revaluation

Key indexes:

Item Current Previous Change

Thomson 95.66 95.73 -0.1
Reuters/HKEX
CNH index
Dollar index 96.485 96.595 -0.1



*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2 percent from official midpoint rate it sets each
morning.

OFFSHORE CNH MARKET

Instrument Current Difference
from onshore
Offshore spot yuan 6.7138 -0.02%
*
Offshore 6.738 -0.43%
non-deliverable
forwards
**

*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.
.


(Reporting by Winni Zhou and John Ruwitch
Editing by Shri Navaratnam)


2019-03-18 06:56:20

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