SHANGHAI: China’s yuan eased against the US dollar on Tuesday as investors adopted a cautious approach ahead of the outcome of ongoing US-China trade talks.
Top US and Chinese officials will resume negotiations for a second day in London later, hoping to secure a breakthrough over export controls for goods such as rare earths that have threatened a global supply chain shock and slower economic growth.
“Markets are in wait-and-see mode ahead of the US-China talks outcome, with volatility continuing to decline,” said a trader at a global bank.
Chinese policymakers are likely to offer only limited concessions on rare earth export controls, potentially in exchange for US moves to ease export restrictions or reduce tariffs, said Citi analysts, adding that China’s 70%-90% control of many critical rare earth materials means that the world’s second-largest economy is in a stronger negotiating position.
The spot yuan opened at 7.1808 per dollar and was last trading at 7.184, 55 pips lower than the previous late session close and hugging the midpoint.
The dollar index, which measures the US currency against six of its key rivals, was 0.25% higher at 99.22, not far from the six-week low it touched last week.
The US-China meeting, which started on Monday, followed a rare call between Chinese President Xi Jinping and his US counterpart Donald Trump last week after tensions flared up again, with both sides accusing the other of violating a deal agreed last month.
China’s yuan inches higher, Sino-US trade talks in focus
Prior to the market opening, the People’s Bank of China set the midpoint rate at 7.1840 per dollar, its strongest since May 26 and 13 pips firmer than a Reuters’ estimate.
The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
The offshore yuan traded at 7.1832 yuan per dollar, up about 0.03%.
In Hong Kong, the Hong Kong dollar slipped to a low of 7.8485 per US dollar and traded not too far from the weaker end of its trading band.
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