Note

Yuan briefly hits 1-week high in holiday-thinned trade, tracking dollar

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    SHANGHAI, Dec 25 (Reuters) - The yuan briefly hit a one-week
high against an easing U.S. dollar on Friday, as the greenback
slipped in global markets after Britain reached a trade deal
with the European Union that followed months of negotiations.
    Risk appetite improved slightly overnight but overall
sentiment in the currency markets was tempered by a stalled U.S.
coronavirus economic relief package.

    The spot yuan market opened at 6.5313 per dollar
and rose to a high of 6.5266 in morning trade, the yuan's
strongest since Dec. 17. At midday it was changing hands at
6.5282, up 19 pips from the previous late-session close.
    Trading was thin as financial markets in many countries were
shut for Christmas, which discouraged domestic market
participants from making huge bets amid a lack of liquidity. The
onshore spot price moved in an extremely tight range of less
than 50 pips on Friday morning, with volume
also shrinking sharply.
    "The yuan was solely tracking the dollar's movements in
global markets," said a trader at a foreign bank.
    Several traders said a new coronavirus strain recently
detected in Britain and the wrangling over the U.S. stimulus
agreement were only likely to bring short-term volatility in the
dollar, with its long-term softening trend intact and supporting
the Chinese unit.
    "USD/CNH will likely test and break below the 6.50 level
after the recent adjustments," Gao Qi, FX strategist at
Scotiabank in Singapore, said in a note on Thursday.
    Prior to the market opening, the People's Bank of China
(PBOC) set the midpoint rate at 6.5333 per dollar, 28
pips firmer than the previous fix of 6.5361. 
    The global dollar index fell to 90.235 at midday,
when offshore yuan was trading at 6.5185 per dollar. 
    
    The yuan market at 0403 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.5333   6.5361    0.04%
                                       
 Spot yuan          6.5282   6.5301    0.03%
                                       
 Divergence from    -0.08%             
 midpoint*                             
 Spot change YTD                       6.66%
 Spot change since 2005                26.78%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         95.33       95.31     0.0
 Reuters/HKEX                          
 CNH index                             
 Dollar index    90.235      90.331    -0.1
 
    
    
*Divergence of the dollar/yuan exchange rate. A 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 the official midpoint rate it sets each
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.5185    0.15%
        *                        
 Offshore              6.6729    -2.09%
 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 Andrew Galbraith
Editing by Edmund Klamann)
  

Our Standards: The Thomson Reuters Trust Principles.

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