Early trade in New York: Yuan set for best day since Dec against dollar

NEW YORK: The yuan on Monday was on track for its best day against the dollar since December as investors lapped up risky assets on growing expectations of a strong Chinese economic rebound and as glimmers of good news in US data drove down demand for the safe-haven dollar.

An index of blue-chip Chinese shares soared to its highest in five years as traders bet on a revival in China, pushing the offshore yuan up 0.75% to its highest level since March 18 and on track for its best daily performance since Dec. 12. It was last at 7.015 yuan per dollar.

"The rally in mainland China equities has been the big catalyst," said Stephen Gallo, European head of FX strategy at BMO Financial Group.

A broad-based risk-on move also weakened the US dollar. Against a basket of six rival currencies, it was last down 0.42% at 96.76, having earlier hit its lowest since June 24.

Monday's move followed a significant technical event on Friday called a death cross - in which the dollar index's 50-day moving average crossed below its 200-day moving average - indicating the potential for a sell-off.

The euro rose to a two-week high of $1.1345, supported by the positive sentiment about a revival in Chinese economic activity as well as strong data.