SHANGHAI: China’s yuan firmed slightly against the dollar on Friday after the central bank lifted the official guidance rate to a more than three-week high, but looked set to end a tense week little changed.

Despite broad dollar weakness, gains in the yuan were limited as investors were wary of taking fresh positions ahead of key US and Chinese economic data over the coming week.

Later on Friday, the US nonfarm payrolls report, due at 1230 GMT, could offer more clues on the health of the world’s largest economy.

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate at 6.7405 per dollar, 231 pips or 0.34% firmer than the previous fix of 6.7636, the strongest level since July 14.

In the spot market, the onshore yuan opened at 6.7421 per dollar and was changing hands at 6.7464 at midday, 21 pips firmer than the previous late session close.

China’s yuan weakens as Pelosi visit to Taiwan heightens tensions

In China, July trade, inflation and credit lending data will all be released next week. After some signs of improvement in June, factory surveys have pointed to a further economic stumble at the start of the second half of the year amid fresh COVID-19 flare-ups and a deepening crisis in the property sector.

“As for data releases over the next two weeks, we look for a continued recovery in July’s activity data, such as fixed asset investment and retail sales, but expect some weakness in credit growth amid weakening property market sentiment,” said Serena Zhou, senior China economist at Mizuho Securities.

Zhou expects the economy to slowly regain momentum and predicts it will expand 4.8% year-on-year in the second half of 2022, leaving full-year growth at 3.7%.

By midday, the global dollar index stood at 105.855, while the offshore yuan was trading at 6.753 per dollar.