China's yuan steady after US CPI, focus switches to Chinese data
SHANGHAI, Sept 12 (Reuters) -China's yuan held steady on Thursday against the dollar, which climbed overnight after data showed higher-than-expected U.S. core inflation, while traders looked to a slew of domestic economic data over the weekend for further catalysts.
On the previous day the yuan had pulled ahead as markets pared back Donald Trump's chances of winning the White House, with investors still wary of the former U.S. president's tariff policies on Chinese goods.
"It's still too early to write off Trump at this stage," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Tan said the bias for the offshore yuan remains lower against the dollar in the near-term and noted the growing calls in China for additional support measures including interest rate cuts.
The dollar was underpinned in overnight trade as markets repriced the possibility of a half a point rate cut by the Federal Reserve next week to just 15%, after U.S. data showed core consumer price index (CPI) rose 0.28% in August, compared with forecasts for a rise of 0.2%. FEDWATCH
Back home, investors are waiting on a slew of economic data due on Saturday including house prices and retail sales for the latest health check on China's stuttering economic recovery.
Sentiment on the yuan remained bearish as the recent data showed no significant improvement in China's growth despite the introduction of stimulus packages earlier this year, said Ken Cheung, director of FX strategy at Mizuho Securities.
The spot yuan CNY=CFXS opened at 7.1245 per dollar and was last trading at 7.1199 as of 0316 GMT, only 7 pips lower than the previous late session close.
Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC, around which the yuan is allowed to trade in a 2% band, at 7.1214 per dollar, its weakest since Aug. 29 and 5 pips firmer than a Reuters' estimate.
The spot yuan CNY=CFXS opened at 7.1245 per dollar and was last trading 7 pips lower than the previous late session close.
The yuan is down 0.4% against the dollar this month, and 0.2% weaker this year.
A broader decline in the dollar in anticipation of U.S. rate cuts in coming months has buffeted the yuan over the past few weeks. The currency has moved higher from the lower bound of its trading band to the middle.
Chinese government 30-year bond yields CN2400004= continued the downward trend, falling 1 basis point to a record low of 2.255%, and the 10-year yield CN240011= hovered near a 22-year low.
The offshore yuan traded at 7.1253 yuan per dollar CNH=, up about 0.06% in Asian trade.
The dollar's six-currency index =USD was 0.020% lower at 101.76.
LEVELS AT 03:16 GMT
INSTRUMENT | CURRENT vs USD | UP/DOWN(-) VS. PREVIOUS CLOSE % | % CHANGE YR-TO-DATE | DAY'S HIGH | DAY'S LOW |
Spot yuan <CNY=CFXS | 7.1199 | 0 | -0.25 | 7.1175 | 7.1245 |
Offshore yuan spot CNH=D3 | 7.1254 | 0.06 | 0.01 | 7.1231 | 7.1295 |
Reporting by Shanghai Newsroom
Editing by Shri Navaratnam
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