Global Market: China’s yuan firms as investors await US CPI data, assess inflation

China's yuan strengthened slightly against the dollar on Wednesday as investors assessed mixed domestic inflation data and awaited US consumer price figures that could influence expectations for the Federal Reserve's interest-rate path, according to Reuters.

The onshore yuan opened at 6.6935 per dollar and was trading at 6.6919 as of 0304 GMT, up 9 pips from the previous late-session close.

Also Read | Global Market Today: Asian stocks rise on Fed rate signal, oil gains


China's producer prices rose at their fastest pace in more than four years in September, while consumer inflation came in below market expectations. Higher oil and commodity prices pushed up factory-gate costs, but weak domestic demand continued to contain broader inflationary pressures.

The dollar edged lower on Wednesday, retreating from an 18-month high touched earlier this week as oil prices eased and investors reassessed an artificial intelligence-driven rally that has supported demand for US assets.

Markets are also awaiting speeches by Federal Reserve policymakers for further clues on the interest-rate outlook, alongside US consumer price index data due later in the day.

Also Read | US stocks: Nasdaq ends down as chipmakers fall and bank earnings roll in

Before the market opened, the People's Bank of China set the yuan's daily midpoint at 6.7249 per dollar, its strongest level since February 2, 2023. The fixing was 327 pips weaker than a Reuters estimate.

China allows the onshore yuan to trade within a 2% band on either side of the daily midpoint, with the central bank's fixing serving as a key indicator of its policy stance.

Yuan outlook remains positive

Analysts at China Securities expect the yuan to extend its moderate appreciation through the remainder of 2026, forecasting that it will end the year in a range of 6.6 to 6.7 per dollar.

The Chinese currency has gained 0.2% against the dollar this month and strengthened 4.5% so far this year.

China Securities analysts expect the dollar's broader cycle and cross-border capital flows to remain key drivers of short-term yuan movements. However, China's trade surplus and a measured approach to policymaking should support a gradual appreciation, they said, as per the report.

OCBC analysts cautioned that the yuan could undergo technical consolidation in the near term, particularly if the strength in the central bank's daily fixing begins to lose momentum.

The offshore yuan traded at 6.6923 per dollar, up around 0.02% during Asian trading.

The dollar index, which measures the US currency against a basket of six major currencies, fell 0.08% to 102.10.

Investors will closely monitor US inflation data and comments from Federal Reserve officials for signals on the potential pace of monetary easing, with developments likely to influence dollar movements and the yuan's near-term direction, the report stated.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)