Yuan weakens, dollar steady ahead of non-farm jobs report

PUBLISHED : Friday, 10 March, 2017, 3:04pm
UPDATED : Friday, 10 March, 2017, 11:27pm

The yuan weakened yesterday while the US dollar edged up in the morning before softening in late trade even as the likelihood of a rate rise by the Federal Reserve gathered pace ahead of ex­pected robust jobs data for February.

The onshore yuan in Shanghai closed 72 basis points lower on Friday at 6.9157 against the US dollar at 4.30pm. China’s central bank guided the mid-point rate down by 2 basis points to 6.9123.Traders in mainland China are only allowed to trade the currency within a 2 per cent range of the guided price.

The offshore yuan weakened 0.06 per cent to 6.9065 per US dollar as of 6.45pm.

For the week, the onshore yuan dropped 0.3 per cent or 209 points, reflecting the third straight week of declines. The offshore yuan in Hong Kong eased 0.15 per cent or 104 points for the week, also reflecting a third straight week of decline.

The US dollar was basically flat against a basket of its major peers as investors priced in the near certainty of a US Federal Reserve rate hike next week.

The DXY US Dollar Index, a measure of the greenback’s strength against the currencies of its six major trade partners, eased 0.02 per cent to 101.82.

A surprisingly robust private US jobs report from ADP has reinforced market expectations that the US central bank has good reason to raise rates during its March 14-15 meeting. Investors are now expecting positive news from nonfarm US payrolls data due later in the US day on Friday.

Meanwhile, the Japanese yen on Friday weakened to 115.37 against US dollar, a six-week low. For the week the currency is down 0.38 per cent.

Geopolitical issues in Asia have been weighing on the yen since North Korea fired four ballistic missiles, three of which fell into the Japanese waters, on Monday.

“We may find the USD with further upside,” wrote Jingyi Pan, a market strategist at IGA in a note. “ECB president Mario Draghi’s speech was interpreted as being less dovish, sending the EUR/USD up.

“With the high weighting of EUR in the USD index, we saw the index itself pulling back slightly to end the climb since the start of the week.”

Sterling weakened for a fifth trading day on Friday, easing 0.05 per cent to US$1.2160. The Euro dropped 0.28 per cent to 1.0607 against US dollar.

Additional reporting by Celia Chen