SHANGHAI/SINGAPORE: China’s yuan eased against the dollar in thin trading on Friday, as many investors remained on the sidelines ahead of key US jobs data which could affect the US monetary policy tightening outlook for the rest of the year.
Domestic currency traders also said the market lacked clear cues from overseas peers due to Easter holiday closures.
Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate at a one-week low of 6.8838 per dollar, 91 pips weaker than the previous fix of 6.8747.
In the spot market, the onshore yuan opened at 6.8800 per dollar and was changing hands at 6.8784 at midday, 83 pips weaker than the previous late session close.
The onshore spot yuan swung in an extremely tight range of less than 50 pips in morning deals, while trading volume contracted to $6.2 billion at midday, little more than a third of normal half-day volume of about $15 billion.
“The market has no clear direction, investors may monitor US data first,” said a trader at a foreign bank.
The closely watched US non-farm payrolls, due later in the day, may offer more clues on the US monetary tightening trajectory, which could affect the dollar and other major currencies including the yuan.
Traders said they will also monitor China’s credit lending and trade data, due next week, to gauge the pace of domestic economic recovery.
China’s yuan eases as market looks to US jobs data for rate clues
“While there is room for the economy to surprise positively this year, Beijing’s putatively modest growth target of 5% suggests that the authorities are not chasing growth at all costs,” said Alvin Tan, head of Asia FX at RBC Capital Markets.
“The current account surplus is also likely to narrow amid higher consumption and the resumption of outbound travel.”
By midday, the global dollar index rose to 101.91 from the previous close of 101.822, while the offshore yuan was trading at 6.8821 per dollar.
The one-year forward value for the offshore yuan traded at 6.734 per dollar, implying a 2.20% appreciation within 12 months.