- U.S. President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike.
- "The market will watch closely whether a partial deal will be documented in the next one month for both leaders to sign officially in mid-November,"
SHANGHAI: China's yuan came off early highs made on signs of progress in negotiations to de-escalate a trade war between the United States and China, but the Chinese currency still ended onshore trade on Monday at a one-month high against the dollar.
The spot market closed at 7.0669 yuan per dollar, the Chinese currency's strongest close since Sept. 16. Earlier in the session the yuan had firmed to 7.0494 per dollar, its strongest in nearly two months.
U.S. President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, though officials on both sides said much more work needed to be done.
Trump hinted that a written agreement could be signed when he meets Chinese President Xi Jinping at a summit of the Asia Pacific Economic Cooperation (APEC) countries in Chile next month.
"The market will watch closely whether a partial deal will be documented in the next one month for both leaders to sign officially in mid-November," said Tommy Xie, head of Greater China research at OCBC Bank in Singapore.
The partial deal between the United States and China would cover agriculture, currency and some aspects of intellectual property protections.
There is speculation among market participants over whether any currency pact would involve Beijing making a commitment to adopting a more transparent exchange rate regime.
A trader at a Chinese bank expects the yuan to trade in a range of 7.0 to 7.1 per dollar before the Trump-Xi meeting.
Gains in the yuan were triggered by large amounts of corporate dollar sales on Monday morning as the bank clients expect further rises in the Chinese unit in the near term, according to traders.
But the yuan's gains were trimmed as major oil companies bought dollars to make their seasonal payments, traders added.
The People's Bank of China (PBOC) set its daily midpoint rate at 7.0725 per dollar prior to market open, just 2 pips firmer than the previous fix of 7.0727.
It was slightly stronger for the yuan than the market had expected, but still hugged the 7.0370 per dollar level, as it has for most of the past month.
The offshore yuan was trading at 7.0685 per dollar as of 0830 GMT.