Yuan briefly hits one-week high, market awaits Fed and Sino-US meeting next week

SHANGHAI: China's yuan briefly hit a one-week high against a softer dollar on Friday before paring some gains, with some caution evident ahead a US central bank policy meeting and a bilateral meeting between senior US and Chinese officials in Alaska next week.

The safe-haven dollar languished near a one-week low on Friday as calming bond markets lifted investor sentiment and appetite for Asian currencies.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.4845 yuan per dollar, 125 pips or 0.19% firmer than the previous fix of 6.497.

In the spot market, onshore yuan opened at 6.4728 per dollar and was changing hands at 6.4875 at midday, still 70 pips firmer than the previous late session close.

If the yuan finishes the late night session at the midday level, it would show a weekly gain of 0.14%.

Stephen Innes, chief global markets strategist at Axi, said in a note that market expectations for the second quarter would be guided by the outcome of the Federal Open Market Committee two-day meeting, which concludes on Wednesday.

Separately, several currency traders said they would pay close attention to the first high-level in-person contact between Beijing and Washington since US President Joe Biden took office.

Chinese diplomats will meet with US officials in Alaska on March 18 and 19, a Chinese foreign ministry spokesman said on Thursday.

The tone of any comments coming out of that meeting could help market participants judge the likely path that Sino-US relations market could take under the new US administration.

By midday, the global dollar index traded at 91.572, while the offshore yuan was changing hands at 6.4878 per dollar.