China's yuan weakened against the dollar on Friday, with news the Trump administration is stepping up efforts to improve US-China relations setting up a period of possible fresh catalysts for the currency market. US President Donald Trump agreed to honor the United States' "One China" policy during a phone call with Chinese President Xi Jinping, the White House said late on Thursday.
Washington's acknowledgement of China's position that it has sovereignty over self-ruled Taiwan comes amid increasing tensions between the two nations, with Trump's campaign threats to label China a currency manipulator keeping global markets on edge.
On Friday, however, the yuan trades were relatively subdued, and there was no notable impact on the markets from upbeat Chinese trade data either, traders said.
"I don't think the trade data will change the market view about the yuan which is likely to remain on a weakening bias this year," said Raymond Yeung, Greater China Chief Economist at ANZ Bank in Hong Kong.
The People's Bank of China set the midpoint rate at 6.8819 per dollar prior to market open, weaker than the previous fix at 6.871.
The spot market opened at 6.8789 per dollar and was changing hands at 6.8777 at midday, 102 pips weaker than the previous late session close but 0.06 percent firmer than the midpoint.
The offshore yuan was trading 0.18 percent firmer than the onshore spot at 6.865 per dollar.
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 95.26, firmer than the previous day's 95.18.
The global dollar index rose to 100.66 from the previous close of 100.65.
Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 7.115, 3.28 percent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
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