SHANGHAI: China’s yuan slipped from a near two-month high against the dollar in holiday-thinned trading on Monday, as US President Donald Trump’s retaliatory plan against Colombia rekindled broader fears of US tariffs against key trading partners.

Uncertainty around US trade policy with China and signs of a slowing domestic economy, highlighted by an unexpected contraction in manufacturing activity in January, are likely to check any upside moves in the yuan, traders and analysts said.

As of 0327 GMT, the onshore yuan was 0.33% lower at 7.2621 to the dollar, compared with a high of 7.2363 hit in the previous session on Friday that was the strongest level since Nov. 29.

If the spot rate finishes the late night session at the midday level, it would have gained 0.5% to the dollar in January to record the first monthly rise since September.

That monthly momentum has been underpinned by Trump’s apparent softening in threats of tariffs on Chinese exports and after his “friendly” recent conversation with Chinese President Xi Jinping.

In offshore trade, the yuan was at 7.2641, down about 0.25%.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1698 per dollar, and 597 pips firmer than a Reuters’ estimate of 7.2295.