Yuan weakens after midpoint fixing at 10-day low

SHANGHAI, Dec 23 (Reuters) - China's yuan inched lower on Monday after the central bank fixed its official midpoint at a 10-day low to reflect broad strength in the greenback following solid economic data. The dollar held firm after data on Friday showed more evidence of resilience in the U.S. economy, already in its longest expansion in history, as growth nudged up in the third quarter. President Donald Trump gave U.S. equities markets more reasons to cheer on Saturday when he said the United States and China would "very shortly" sign their Phase 1 trade pact.

Prior to market opening on Monday, the People's Bank of China (PBOC) set the yuan midpoint rate at 7.0117 per dollar, 97 pips or 0.14% weaker than the previous fix of 7.002. Monday's official guidance rate was fixed at the weakest since Dec. 13. In the spot market, onshore yuan opened at 7.0080 per dollar and was changing hands at 7.0126 at midday, 61 pips weaker than the previous late session close. Trading was very thin in the morning session, with the onshore spot yuan swinging in a range of about 50 pips and volume shrinking to $8.979 billion, down from a normal half-day volume of about $15 billion. Many market watchers believe the yuan will continue to be affected by developments in the Sino-U.S. trade negotiations in the near term but investors will also start to pay more attention to economic fundamentals. "In the short term, the yuan's movement will depend on the trade talk developments, yield gap between China and the United States, and fundamentals of China's economy," analysts at OCBC Wing Hang Bank said in a note. Several currency traders expect the yuan to consolidate at the key 7-per-dollar level into the year-end. The global dollar index traded at 97.639 at midday from the previous close of 97.69. The offshore yuan was trading at 7.0071 per dollar as of midday.

The yuan market at 4:00 GMT:




Key indexes:

Reuters/HKEX CNH index

*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 percent from official midpoint rate it sets each morning.


from onshore

non-deliverable forwards


*Premium for offshore spot over onshore

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

(Reporting by Winni Zhou and Brenda Goh; Editing by Jacqueline Wong)