Yuan holds steady on trade deal ahead of more detail

• Currency markets were largely muted after a majority of lawmakers in the US House of Representatives voted to impeach Trump.
• The global dollar index fell to 97.325 at midday from the previous close of 97.4.
• Analysts at China Construction Bank (Asia) said there was no clear direction on the yuan for now.

SHANGHAI: China's yuan was broadly steady early on Thursday, as investors awaited details of the Phase 1 Sino-US trade deal and took US President Donald Trump's impeachment in stride.

Currency markets were largely muted after a majority of lawmakers in the US House of Representatives voted to impeach Trump, formally charging him with abuse of power and obstruction of Congress.

Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 7.0025 per dollar, 56 pips or 0.08% weaker than the previous fix of 6.9969.

In the spot market, onshore yuan opened at 7.0010 per dollar and was changing hands at 7.0040 at midday, 15 pips stronger than the previous late session close.

Traders said the yuan remained steady at around 7 per dollar ahead of more clarity on the trade agreement between Beijing and Washington.

Analysts at China Construction Bank (Asia) said there was no clear direction on the yuan for now.

Investors have became more cautious taking big bets, traders said, with the currency expected to fluctuate around the key threshold.

"In the absence of a hard tariff deadline for the time being, we reckon the negotiation process of the Phase 2 deal with China would prove to be rather slow," Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong, said in a note.

"Against this backdrop, the RMB may enter into range trading at around the 7 handle for a while even after signing the Phase 1 deal on the back of the deadlocked Phase 2 deal negotiations."

A trader at a Chinese bank pointed out that while trade deal optimism supported the market, continued dollar demand by corporate clients to meet year-end payments would likely limit the strength of the yuan.

The global dollar index fell to 97.325 at midday from the previous close of 97.4.