SHANGHAI: China's yuan was largely flat against the dollar on Monday morning, as optimism over Sino-US trade negotiations was offset by broad dollar strength following solid US job data.
US and Chinese negotiators wrapped up their latest round of trade talks on Friday and were scheduled to resume discussions next week to try to secure a pact that would end a tariff war that has roiled global markets.
Yuan traders said growing hopes of a positive outcome were supportive for the yuan.
Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.7201 per dollar, 146 pips or 0.22 percent weaker than the previous fix of 6.7055 on Thursday. China's markets were closed on Friday for a holiday.
In the spot market, the onshore yuan opened at 6.7120 per dollar and was changing hands at 6.7179 at midday, only 1 pip away from the previous late session close.
The onshore spot yuan traded in a tight range of about 70 pips on Monday morning, with volume shrinking to $13.16 billion as of midday, down from a normal half-day volume of about $15 billion.
"Trade negotiations and the global dollar index performance will continue to drive the market," said a trader at a Chinese bank, adding there was some slight dollar demand in early deal.
China is expected to report loan growth, inflation and trade data this week.
Separately, China's foreign exchange reserves rose for a fifth straight month in March, with the increase exceeding expectations.
Bill Zhou, analyst at China Construction Bank (Asia) in Hong Kong expected the yuan to hover at 6.70 per dollar level, in a range of 6.68 to 6.74 per dollar.
Zhou also expects the 55-day moving average of 6.7340 and 6.7360 to become the short-term support for onshore and offshore yuan, respectively.
As of midday, the offshore yuan was trading at 6.7222 per dollar.
In global markets, the dollar rose against a basket of six major currencies after US employment growth accelerated from a 17-month low in March, assuaging fears of an abrupt slowdown in economic activity.
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