SHANGHAI: China's yuan eased against the U.S. dollar on Wednesday as market sentiment soured on reports of renewed tensions in Sino-U.S. trade negotiations.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for another round of trade talks with Chinese Vice Premier Liu He. But a Bloomberg report said that Chinese officials have "stepped back" from some initial promises they had made.
The report "provided a brief risk-off overtone early this morning," FX strategists at OCBC Bank in Singapore said in a note.
Prior to the market opening on Wednesday, the People's Bank of China (PBOC) set the midpoint rate at 6.7101 per dollar, 39 pips or 0.06 percent weaker than the previous fix of 6.7062.
In the spot market, onshore yuan opened at 6.7126 per dollar and was changing hands at 6.7139 at midday, 26 pips weaker than the previous late session close and 0.06 percent softer than the midpoint.
But many investors remained on the sidelines ahead of a U.S. Federal Reserve policy decision which will be announced early on Thursday Asian time.
With the Fed widely expected to keep interest rates unchanged, investors are looking to policymakers' views on the rate path for the rest of the year after the central bank said in January it would be patient on further rate hikes.
"The market is now focusing on the Fed decision to gauge its impact on the yuan," said a trader at a Chinese bank.
The global dollar index rose to 96.466 at midday, from the previous close of 96.383. The offshore yuan was trading at 6.7174 per dollar as of midday.
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