SHANGHAI: China's yuan inched up against the U.S. dollar at midday on Friday, steadying somewhat after the data-driven swings of the previous two sessions.
The Chinese currency leapt on Wednesday after a raft of unexpectedly stronger-than-expected data suggested the slowing economy may be starting to stabilise. It then slumped the next day for its worst performance in two months as focus turned to
Sino-U.S. trade talks and as some investors took advantage to buy the greenback on the cheap. Traders expect the Chinese currency to remain in a tight range over the near term, shackled by the yet-unresolved trade war with the United States and a slowing global economy. A Wall
Street Journal report said on Thursday that a deal may be ready to be signed by late May or early June.
Prior to market opening on Friday, the People's Bank of China (PBOC) set the midpoint rate at 6.7043 per dollar, weaker than the previous fix of 6.6911.
In the spot market, the onshore yuan opened at 6.7065 per dollar and was changing hands at 6.7020 at midday, 65 pips firmer than the previous late session close and 0.03 percent firmer than the midpoint.
If the yuan finishes the week at the midday level, it would leave it largely flat for the week with a marginal 0.04 percent gain on the dollar.
Traders said the 6.7 per dollar appeared to offer some resistance, adding that there were very few catalysts due to the closure of many overseas financial markets for the Good Friday and Easter holidays. While currency markets remain open trading volume is expected to be light.
Wang Tao, chief China economist at UBS in Hong Kong, expects the yuan to trade in a range of 6.6 to 6.8 per dollar for the rest of the year, saying that factors such as the recent dovish turn of the Federal Reserve, a stabilising Chinese economy and Sino-U.S. trade talks would influence markets.
"Should the USD weakens notably from here, we could see CNY strengthening against the USD beyond 6.6, but unlikely beyond 6.5, while if the USD strengthens markedly, we expect the CNY to weaken toward 7 but not beyond it in 2019," Wang said in a note.
The global dollar index was down at 97.403 at midday, from the previous close of 97.474.
The offshore yuan was trading at 6.7018 per dollar as of midday.
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