SHANGHAI: China's yuan eased slightly against a firmer dollar on Thursday, as recent disappointing economic indicators continued to weigh on market sentiment, while traders are awaiting US non-farm payrolls due later this week for more clues on Fed tapering.
The People's Bank of China (PBOC) set the midpoint rate at 6.4594 per dollar prior to the market open, the strongest since June 29 and firmer than the previous fix of 6.4680.
In the spot market, the yuan opened at 6.4580 per dollar and was changing hands at 6.4622 at midday, 17 pips weaker than the previous late session close.
A slew of recent economic data, including both official and private manufacturing surveys released this week, showed that the world's second-largest economy could face increasing downside pressure in the remainder of the year, raising hope for more policy support measures.
Economic fundamentals are among the key factors influencing the yuan, according to market analysts and traders.
"Speculation is swirling on more liquidity support as a 'funding gap' is identified for September, with more medium -term loans due and the issuance of special bonds rising," said Maybank in a note.
China’s yuan touches 3-week high
Financial services company Gavekal said in a note it expects the yuan to ease modestly in coming months, citing slowing exports, weakening capital-account inflows, and divergent Fed and PBOC policies in the future.
US indicators have been mixed this week. On Tuesday data showed rising COVID-19 cases were hitting consumer confidence , while on Wednesday US manufacturing activity and new orders increased, but private payrolls missed forecasts.
Traders are awaiting a fuller jobs readout this week, including the closely watched US non-farm payrolls data due on Friday. Fed Chair Jerome Powell said last week that the jobs recovery would determine the timing of the asset purchase tapering.
The global dollar index rose to 92.519 from the previous close of 92.509, while the offshore yuan was trading 0.08 percent away from the onshore spot at 6.4568 per dollar.
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