SHANGHAI: China’s yuan almost touched a one-month high against the dollar in offshore trading on Monday, as the greenback weakened after soft US jobs data last week, but some traders said the gains were likely temporary ahead of key economic data this week.

The slower-than-expected nonfarm payrolls in the world’s largest economy also raised market expectations that the Federal Reserve is likely to keep interest rates steady at its next policy meeting in December. The Fed’s monetary policy trajectory affects dollar and other major currencies, including the yuan.

“The Chinese yuan strengthened against the US dollar as the dollar retreated last week, offsetting the negative impacts driven by weaker-than-expected China PMI numbers,” said Lin Li, head of global market research for Asia at MUFG.

The offshore yuan rose to a high of 7.2827 per dollar, the strongest level since Oct. 10, before trading at 7.2888 around midday.

Its onshore counterpart surged to a high of 7.2599 in late night trading on Friday and gave up some of the gains to settle at 7.2832 at midday on Monday.

“Data-wise, Oct CPI and PPI is still very much watched for any signs that deflationary forces remain at work due to demand deficit at home,” Maybank analysts said in a note.

“That could possibly dampen the recent rally that Asian FX staged post Fed and nonfarm payrolls.”

Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1780 per dollar, 16 pips firmer than the previous fix of 7.1796.

But Monday’s official guidance rate continued to come in much stronger than market had projected, a situation that has persisted for months, which analysts and traders interpreted as an official attempt to rein in yuan weakness.