SHANGHAI: China's yuan eased on Friday morning and looked set for a weekly loss, dragged lower by a rise in the dollar after the US Senate approved a budget blueprint for the 2018 fiscal year.

Traders said the Chinese yuan was under pressure in Friday morning trade in the face of continuous corporate dollar buying, along with broad dollar strength in the overseas market.

The 10-year US Treasury yield rose as bond prices fell after the Republican-controlled Senate approved a tax-cutting measure that could add up to $1.5 trillion to the federal deficit over the next decade.

Prior to market opening on Friday, the People's Bank of China set the midpoint rate at 6.6092 per dollar, only 1 pip firmer than the previous fix 6.6093.

In the spot market, the spot market opened at 6.6080 per dollar and was changing hands at 6.6235 at midday, 65 pips weaker than the previous late session close and 0.22 percent softer than the midpoint.

If spot yuan closes the late night session at the current level, it would have lost 0.65 percent of its value against the greenback this week.

Corporate dollar demand has been a key driver for the onshore spot yuan this week, traders said, as some companies with financing needs usually buy dollars around the middle of the month.

Tommy Xie, economist at OCBC Bank in Singapore, said the yuan's recent movements have increased expectations of two-way volatility, which have appeared as steady rises in implied volatility in yuan options since August.

He expects the onshore yuan to swing in a 6.5 to 6.7 per dollar range in the remainder of the year.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.63, firmer than the previous day's 95.55.

The global dollar index rose to 93.446 from the previous close of 93.266.

The offshore yuan was trading at 6.6235 per dollar as of midday, the same level as its onshore counterpart.

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 6.7785, 2.50 percent weaker than the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.