SHANGHAI: The Chinese yuan eased slightly against the dollar on Monday, as the market assessed the impact of military strikes on Syria over the weekend and shifted attention to China's first-quarter economic data this week.
The United States, France and Britain launched missiles targeting what the Pentagon said were chemical weapons facilities in Syria on Saturday, in retaliation for a suspected poison gas attack on April 7.
Prior to market opening on Monday, the People's Bank of China set the midpoint rate at 6.2884 per dollar, 14 pips firmer than the previous fix of 6.2898 on Friday.
In the spot market, the onshore yuan opened at 6.2760 per dollar and was changing hands at 6.2837 at midday, 64 pips weaker than the previous late session close but 0.07 percent firmer than the midpoint.
With trade tensions between the United States and China cooling for now, yuan sentiment could hinge on other factors affecting the dollar, such as the Syrian crisis, traders said.
"As the impact of trade tension on RMB is likely to diminish, the near term driving factor for RMB may go back to the US dollar," Tommy Xie, economist at OCBC Bank said in a note on Monday.
However, the dollar was largely steady against its major trading partners and firmed against the safe-haven yen on Monday.
The global dollar index, a gauge that measures the unit's strength against six other currencies, stood at 89.757 as of midday, compared with the previous close of 89.8.
The market's focus was also on China's first quarter gross domestic product data due on Tuesday.
Iris Pang, economist at ING, said in a note on Monday that China's GDP should continue to be strong at 6.8 percent year on year in the first quarter. Hence, she kept her forecast for the yuan to trade at 6.25 per dollar by the end of June and 6.1 by the end of this year.
A Reuters poll of economists had forecast the economy to grow 6.7 percent in the first quarter, slightly slower than 6.8 percent in the fourth quarter.
Meanwhile, the Trump administration again refrained from naming any major trading partners as currency manipulators on Friday, but the US Treasury's semi-annual currency report criticised China for the "non-market direction" of its economy and warned of global risks.
Market participants had widely expected that China would not be targeted as a currency manipulator.
The Chinese currency edged up 0.4 percent versus the greenback last week, and also rose 0.4 percent on a trade-weighted basis against a basket of its trading partners' currencies, according to official data from the China Foreign Exchange Trade System (CFETS).
The index, published on a weekly and monthly basis, stood at 96.97 by the end of last week.
OCBC's Xie said the rebound in the trade-weighted yuan index might be a result of "China's assurance not to use currency depreciation as the tool for trade tension".
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 98.05, firmer than the previous day's 97.89.
The offshore yuan was trading 0.03 percent firmer than the onshore spot at 6.2821 per dollar.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.3635, 1.18 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
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