Yuan eases, traders hold off on bets before US data, CPC's 100th anniversary
- Official comments suggested that "policymaker's pessimistic expectations for the domestic economy have risen significantly," analysts at Guotai Junan Securities wrote in a note.
SHANGHAI: China's yuan eased against the dollar on Tuesday, though trading was stuck in an extremely tight range as many investors moved to the sidelines awaiting key US economic data for clues on the Federal Reserve's policy outlook.
The ongoing plans for celebrating the 100th anniversary of the Chinese Communist Party on July 1 also kept markets in check, traders said, noting that domestic financial markets were usually stable before and during key economic and political events.
Prior to market opening on Tuesday, the People's Bank of China (PBOC) set the midpoint rate at a one-week high of 6.4567 per dollar, 11 pips firmer than the previous fix of 6.4578.
In the spot market, onshore yuan opened at 6.4583 per dollar and was changing hands at 6.4609 at midday, 47 pips weaker than the previous late session close.
While Friday's closely-watched US jobs report could sway the Fed's policy outlook, many analysts believe China's central bank would continue to prioritise stability in monetary policy, offering a degree of certainty to domestic financial markets.
Global markets have been on edge since earlier this month after the Fed shocked traders by making a hawkish policy tilt.
On Monday, the PBOC said it will make its monetary policy flexible, targeted and appropriate, while keeping interbank liquidity reasonable, as authorities seek to consolidate a post-COVID-19 economic recovery.
Official comments suggested that "policymaker's pessimistic expectations for the domestic economy have risen significantly," analysts at Guotai Junan Securities wrote in a note.
"The PBOC pledged to prevent the external shocks and we reckon that preserving financial stability in China markets and filtering the spillovers of major central banks' policy shift will be one of the PBOC's key tasks in H2," said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong.
By midday, the global dollar index rose to 91.961 from the previous close of 91.867, while the offshore yuan was trading at 6.4622 per dollar.
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