China's yuan firmed slightly against the dollar on Friday after the central bank lifted the official guidance rate to a more than three-week high, but looked set to end a tense week little changed. Despite broad dollar weakness, gains in the yuan were limited as investors were wary of taking fresh positions ahead of key U.S. and Chinese economic data over the coming week. Later on Friday, the U.S. nonfarm payrolls report, due at 1230 GMT, could offer more clues on the health of the world's largest economy. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.7405 per dollar, 231 pips or 0.34% firmer than the previous fix of 6.7636, the strongest level since July 14.

In the spot market, the onshore yuan opened at 6.7421 per dollar and was changing hands at 6.7464 at midday, 21 pips firmer than the previous late session close. In China, July trade, inflation and credit lending data will all be released next week. After some signs of improvement in June, factory surveys have pointed to a further economic stumble at the start of the second half of the year amid fresh COVID-19 flare-ups and a deepening crisis in the property sector.

"As for data releases over the next two weeks, we look for a continued recovery in July's activity data, such as fixed asset investment and retail sales, but expect some weakness in credit growth amid weakening property market sentiment," said Serena Zhou, senior China economist at Mizuho Securities. Zhou expects the economy to slowly regain momentum and predicts it will expand 4.8% year-on-year in the second half of 2022, leaving full-year growth at 3.7%.

By midday, the global dollar index stood at 105.855, while the offshore yuan was trading at 6.753 per dollar. The yuan market at 0400 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.7405 6.7636 0.34% Spot yuan 6.7464 6.7485 0.03% Divergence from 0.09% midpoint* Spot change YTD -5.80% Spot change since 2005 22.68% revaluation Key indexes: Item Current Previous Change Thomson 0.0 Reuters/HKEX CNH index Dollar index 105.855 105.693 0.2 *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. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.753 -0.10% * Offshore 6.6911 0.74% 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 Kim Coghill)


Reuters