News of a possible trade deal in the near future between the U.S. and China lifted the Chinese yuan on early Monday in Asia ahead of the start of China’s annual meeting of the National People’s Congress in Beijing, which begins Tuesday.

The USD/CNY pair dropped by 0.25% to 6.6882 by 11:06 PM EST (4:06 AM GMT).

Hopes of a trade deal to end the year-long Sino-U.S. dispute has been supporting the yuan since late last month. A Wall Street Journal report on Sunday said that, based on the progress in trade talks between the U.S. and China, there could be a formal agreement around March 27.

The market may shift its attention away from the trade dispute soon.

“The market will pay less attention to bilateral trade developments, and will instead re-focus on China data,” NatWest Markets emerging-markets Asia strategist Maximillian Lin told Bloomberg.

Lin also predicted that the yuan would weaken to 6.8 per dollar by year-end, after a modest gain in the coming months, as growth slows and the current-account surplus shrinks.

Delegates have already arrived in Beijing for Tuesday’s National People’s Congress which usually attracts market attention as it gives out clues for the country’s economic and policy outlook.

The People’s Bank of China (PBOC) set the yuan reference rate at 6.7049 compared with the previous day’s fix of 6.6957.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies fell 0.11% to 96.345.

The USD/JPY pair was up 0.06% to JPY111.97. The greenback had dipped against the Japanese currency to JPY111.75 after President Donald Trump criticized the Federal Reserve’s monetary policy and a strong dollar.

“We have a gentleman that likes a very strong dollar at the Fed… I want a strong dollar, but I want a dollar that’s great for our country not a dollar that is so strong that it is prohibitive for us to be dealing with other nations,” Trump said at the annual Conservative Political Action Conference on Saturday.

The U.S. dollar rose last Friday after data showed that the American economy registered strong annual growth.

The Aussie, deemed as having a strong correlation with Chinese economic growth and a proxy for the yuan, also gained on the positive trade news. The AUD/USD pair gained 0.16% to $0.7091.

Australia, Canada and European central banks are having meetings this week.

“All of them are likely to take either a dovish or neutral stance,” said Shinichiro Kadota, senior FX & rates strategist at Barclays (LON:BARC), according to Reuters. “That should support ‘risk-on’ trades.”

Elsewhere, the USD/NZD pair inched down 0.13% to 1.4680.


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