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Yuan eases as markets await non-farm payrolls

reuters.com · 09/02/2021 00:42
Yuan eases as markets await non-farm payrolls

- China's yuan eased slightly against a firmer dollar on Thursday, as recent disappointing economic indicators continued to weigh on market sentiment, while traders are awaiting U.S. non-farm payrolls due later this week for more clues on Fed tapering.

The People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.4594 per dollar prior to the market open, the strongest since June 29 and firmer than the previous fix of 6.4680.

In the spot market, the yuan CNY=CFXS opened at 6.4580 per dollar and was changing hands at 6.4622 at midday, 17 pips weaker than the previous late session close.

A slew of recent economic data, including both official and private manufacturing surveys released this week, showed that the world's second-largest economy could face increasing downside pressure in the remainder of the year, raising hope for more policy support measures.nZUN0037RQ

Economic fundamentals are among the key factors influencing the yuan, according to market analysts and traders.

"Speculation is swirling on more liquidity support as a 'funding gap' is identified for September, with more medium -term loans due and the issuance of special bonds rising," said Maybank in a note.

Financial services company Gavekal said in a note it expects the yuan to ease modestly in coming months, citing slowing exports, weakening capital-account inflows, and divergent Fed and PBOC policies in the future.

U.S. indicators have been mixed this week. On Tuesday data showed rising COVID-19 cases were hitting consumer confidence nL1N2Q21C0, while on Wednesday U.S. manufacturing activity and new orders increased, but private payrolls missed forecasts. nL1N2Q30WG

Traders are awaiting a fuller jobs readout this week, including the closely watched U.S. non-farm payrolls data due on Friday. Fed Chair Jerome Powell said last week that the jobs recovery would determine the timing of the asset purchase tapering. nN9N2NL019nL1N2Q401R

The global dollar index =USD rose to 92.519 from the previous close of 92.509, while the offshore yuan CNH=D3 was trading 0.08 percent away from the onshore spot at 6.4568 per dollar.



The yuan market at 0420 GMT:


ONSHORE SPOT:

Item

Current

Previous

Change

PBOC midpoint CNY=SAEC

6.4594

6.468

0.13%

Spot yuan CNY=CFXS

6.4622

6.4605

-0.03%

Divergence from midpoint*

0.04%

Spot change YTD



1.02%

Spot change since 2005 revaluation


28.08%


Key indexes:

Item

Current

Previous

Change

Thomson Reuters/HKEX CNH index

98.64

98.68

0.0

Dollar index

92.519

92.509

0.0




*Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning.


OFFSHORE CNH MARKET

Instrument

Current

Difference from onshore

Offshore spot yuan CNH= *

6.4568

0.08%

Offshore non-deliverable forwards CNY1YNDFOR= **

6.6329

-2.62%


*Premium for offshore spot over onshore CNY=CFXS

**Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. CNY=SAEC.



(Reporting by Shanghai Newsroom; Editing by Kim Coghill)

((Jason.Xue@thomsonreuters.com;))