HONG KONG: China’s yuan extended recent advances on the dollar on Thursday as the US currency struggled against the backdrop of rising expectations for an outsized rate cut from the Federal Reserve following weaker US economic data.

All eyes are on the US payrolls data due on Friday for more clues on the health of the world’s largest economy and how aggressively the Fed will cut rates at its meeting later this month.

Prior to the market opening, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.0989 per dollar, its strongest since April 15 and 21 pips firmer than a Reuters’ estimate.

By 0317 GMT, the yuan was 0.15% higher at 7.1017 to the dollar after trading in a range of 7.0962 to 7.1044.