SHANGHAI, – China‘s yuan remained largely steady on Friday, while the dollar hovered close to an eight-week low on Friday, ahead of a crucial U.S. jobs report that should provide clues on when the Federal Reserve will start to cut interest rates. Prior to the market open, the People’s Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1106 per U.S. dollar, firmer than the previous fix of 7.1108. In the spot market, the onshore yuan opened at 7.2439 per dollar and was changing hands at 7.2457 at midday, 10 pips weaker than the previous late session close. The Chinese currency has fallen around 2% on the dollar so far this year. Market moves were largely subdued as traders stayed on guard ahead of Friday’s U.S. nonfarm payrolls report, where expectations are for the world’s largest economy to have added 185,000 jobs last month. “Readings in line with or close to the expectations should keep the DXY (Dollar Index) and UST (U.S. Treasury bond) yields we believe steady but more substantial moves could come if the readings fell much lower than estimates or came out well above it,” Maybank analysts said in a note. “In the scenario that it comes out in line or close with estimates, markets would still be waiting to see how the FOMC pans out and what the committee’s reaction would be to the recent slew of softer U.S. data,” the bank said. The yuan remained steady after data showed China’s exports grew more quickly and for a second month in May, suggesting global demand for Chinese goods was intact, providing some relief to the economy as it battles to mount a durable recovery amid a protracted property sector downturn. Denting sentiment, the Wall Street Journal reported on Thursday that Chinese battery companies with ties to Ford and Volkswagen should be banned from shipping goods to the U.S., a group of Republican lawmakers said, alleging their supply chains use forced labor. The reported weighed on the stock market. The global dollar index rose to 104.107 from the previous close of 104.102. The offshore yuan was trading at 7.2569 per dollar. The yuan market at 0408 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 0.00% 7.1106 7.1108 Spot yuan -0.01% 7.2457 7.2447 Divergence from midpoint* 1.90% Spot change YTD -2.04% Spot change since 2005 revaluation 14.23% *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 * -0.15% 7.2569 Offshore non-deliverable 1.08% forwards 7.0345 ** (Reporting by Shanghai Newsroom; Editing by Jacqueline Wong)
