SHANGHAI: China’s yuan slipped slightly on Tuesday as traders were wary ahead of key inflation data from major economies this week that could provide clues on the path for global rates over the short term.
Prior to the market open, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1101 per US dollar, weaker than the previous fix of 7.1091.
In the spot market, the onshore yuan opened at 7.2425 per dollar and was changing hands at 7.2461 at midday, 11 pips weaker from the previous late session close.
The dollar waned on Tuesday following a slight pick up in risk appetite, but it held tight ranges against its peers before this week’s inflation reports from key economies including Germany, Japan and the United States.
Friday’s US core personal consumption expenditures (PCE) price index report will be the biggest focus for the market, as it is the Federal Reserve’s preferred measure of inflation.
Expectations are for the index to hold steady on a monthly basis.
“Soft or softer data could potentially weigh on the greenback more as markets continue to remain data-dependent,” Maybank analysts said in a note.
The bank said yuan sentiment would be more sustainably boosted if China is able to stabilize the housing market at home and lift private consumption.
China’s yuan hovers near 1-month low as investors await economic data
In the latest move, China’s commercial hub Shanghai lowered the minimum downpayment ratios for home buyers and relaxed some home purchase restrictions, after the country lowered the national level in a market stabilising effort earlier this month.
“Consumers may not be confident enough to purchase new homes unless they are sure that home prices will not continue to fall,” Maybank said.
The global dollar index fell to 104.45 from the previous close of 104.595.
The offshore yuan was trading at 7.2587 per dollar.
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