HONG KONG: The Chinese yuan weakened slightly on Tuesday as investors stayed on the sidelines to await the results of the US mid-term elections.

The People's Bank of China set the midpoint rate at 6.9075 per dollar prior to market open, weaker than the previous fix 6.8976.

The spot market opened at 6.9237 per dollar and was changing hands at 6.9230 by midday, 32 pips stronger from the previous late session close and 0.22 percent away from the

midpoint. The spot rate can trade 2 percent either side of the fix.

Hopes that trade tensions between Beijing and Washington would ease were encouraged on Tuesday morning, as vice president Wang Qishan said China is ready for talks with the United States.

Wang's remarks came after a phone call between US President Donald Trump and Chinese President Xi Jinping last week and ahead of the two leaders' meeting at a G20 summit later in November.

Yet despite these gestures to end the trade war, the "CNH bears are back at it again" on Tuesday because they know "that the path to any trade agreement between the US and China will be fraught with peril," Stephen Innes, head of trading at Oanda said in a note on Tuesday.

"In terms of fundamentals, nothing has changed," he said. "That's why the weaker longs are being washed out. The price action on Tuesday makes sense."

The offshore yuan was trading 0.04 percent away from the onshore spot at 6.9203 per dollar.

Most investors are on hold, as they keep an eye on the outcome of the mid-terms and its impact on Trump's trade policy, said Ken Cheung, senior Asian FX strategist at Mizuho. He expects the offshore yuan to trade between 6.88 and 6.93 ahead of the mid-term results.

"The major uncertainty for the yuan exchange rate is the trade war. The outcome of that could still change," Cheung said.

Other elements that could swing the yuan, such as the interest rate differential between US and China, or the Chinese central bank's preference for a stable yuan, possibly on the stronger side of 7, were unlikely to change in the near term, Cheung added.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.03, weaker than the previous day's 93.08.

The global dollar index rose to 96.375 from the previous close of 96.279.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan's value, traded at 6.988, -1.15 percent away from the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.