China's yuan looks set for biggest weekly loss in six, investors await next catalyst

SHANGHAI/SINGAPORE, April 21 (Reuters) - China's yuan inched lower against the dollar on Friday and looked set for a marginal weekly loss, though the biggest in six weeks, as investors continued to await clues on U.S. monetary tightening as the next trading catalyst. The weakness in the local currency was tracking the firmer greenback in global markets , as bets for another rate hike by the U.S. Federal Reserve in May firmed, though its gains were capped by soft economic data pointing to a slowing economy. "The dollar's movements and the Fed's policy outlook should continue to guide the yuan," said a trader at a foreign bank. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.8752 per dollar, 235 pips firmer than the previous fix of 6.8987.

In the spot market, the onshore yuan opened at 6.8780 per dollar and was changing hands at 6.8852 at midday, 112 pips softer than the previous late session close. The yuan looked set to finish the week down around 0.23% to the dollar, its biggest weekly loss since mid-March. But, currency traders said the yuan has been stuck in a narrow range for nearly two months, with many market participants adopting conservative trading strategies which are further curbing volatility. "This pair needs to break out of recently established range for greater directional cues," Maybank analysts said in a note. "Otherwise, this 6.81-6.93 range could continue to hold." Separately, China's FX regulator told media on Friday that foreign investors increased their holdings of China's onshore yuan bonds in March, and it expected more capital inflows amid signs of economic recovery. Traders said they were still wary of developments in Sino-U.S. relations, as any sign of escalations in conflicts could hurt investor sentiment and drag the yuan lower. By midday, the global dollar index stood at 101.817, while the offshore yuan was trading at 6.8903 per dollar.

The one-year forward value for the offshore yuan traded at 6.7281 per dollar, indicating a 2.41% appreciation within 12 months.

The yuan market at 0415 GMT:

ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.8752 6.8987 0.34% Spot yuan 6.8852 6.874 -0.16% Divergence from 0.15%
midpoint*
Spot change YTD 0.21% Spot change since 2005 20.21% revaluation

Key indexes:
Item Current Previous Change

Dollar index 101.817 101.84 0.0

*Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET

Instrument Current Difference from onshore Offshore spot yuan 6.8903 -0.07%
*
Offshore 6.7285 2.18% non-deliverable
forwards
**

*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. .
(Reporting by Winni Zhou and Tom Westbrook; Editing by Kim Coghill)

Messaging: winni.zhou.thomsonreuters.com@reuters.net))

Reuters

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

off-the-wire

China's yuan looks set for biggest weekly loss in six, investors await next catalyst

By Reuters

Reuters

Reuters

Solid price gains for gold, silver after busy news weekend

Gold is never going back to $2,000: 'That's history,' prices to 3x from here – Peter Schiff

‘Biggest economic shift since Nixon’: Major U.S. monetary policy changes coming in 12-36 months – Jack Mallers

India joins South Africa in denying BRICS currency plans after Trump’s 100% tariff threat

Silver prices breach $32/oz as bullish technicals and fundamentals suggest potential breakout

off-the-wire

China&apos;s yuan looks set for biggest weekly loss in six, investors await next catalyst

By Reuters

Reuters

Reuters

China's yuan looks set for biggest weekly loss in six, investors await next catalyst