China’s yuan briefly touched a
one-month high against a softer dollar before giving up all the
gains by midday on Friday, pressured by a disappointing services
activity survey.
Traders say they are awaiting U.S. non-farm payrolls due
later in the session for more clues on when the Federal Reserve
may begin to taper stimulus.
The People’s Bank of China set the midpoint rate
at 6.4577 per dollar prior to market open, the strongest since
June 29 and firmer than the previous fix of 6.4594.
In the spot market, the yuan opened at 6.4530 per
dollar and was changing hands at 6.4598 at midday, 37 pips
weaker from the previous late session close.
A private survey on Friday showed that activity in China’s
services sector slumped into sharp contraction in August,
following data earlier this week which showed a slowdown in the
manufacturing sector.
Worries over economic downside pressure weighed on sentiment
and outweighed the support from a weakened dollar index,
a trader from a foreign bank said.
Investors anticipate that Beijing will accelerate fiscal
spending and credit growth as its economic recovery slows, but
that such measures will be finely targeted as the Fed prepares
to taper its own stimulus.
Traders are closely eyeing U.S. non-farm payrolls data for
more clues on the timing and pace of Fed tapering, as Fed Chair
Jerome Powell said last week an improvement in the employment
numbers would determine the timing of the action.
U.S. data on Thursday showed layoffs dropped to their lowest
in more than 24 years. However, the ADP report on
Wednesday showed U.S. private employers hired far fewer workers
than expected in August.
The global dollar index fell to 92.212 from the
previous close of 92.227, while the offshore yuan was
trading 0.09% away from the onshore spot at 6.4537 per dollar.
– Reuters