China's currency rallied versus the US greenback late Tuesday, as China's major financial districts buckled down to work following a one-week break, and as investors wrap their minds back on the spectacle of sorts that is the China-US business negotiations set in the coming days.
The yuan's degree of hinted unpredictability has made it advance to its highest in less than 30 days, largely due to doubts about how the meetings between Chinese and American trade experts will play out. Add to this the reality the bigger tariffs imposed by Washington on $250 billion worth of Chinese products are set to take effect middle of this month.
Prospects for any positive outcome from the much-ballyhooed tete-a-tete between the two economic superpowers were dimmed after Trump and his trade advisers placed 28 Chinese tech firms and public security bureaus on a blacklist.
In the forex spot market, the onshore yuan opened at 7.1329 per one USD and was shifting hands at 7.1261 during midday sessions, 220 pips higher compared to the previous extended trading's close by end of September.
The People's Bank of China has fixed the yuan's midpoint level at 7.0727 per one USD, before the opening bell, at 3 pips steadier compared to the previous peg of 7.0728.
The central has consistently pegged its final mid-point firmer than analysts' projections since early September in a tight level just over the key 7.1/USD mark, with analysts interpreting the rate as an attempt to keep the currency stable.
According to Axi-Trader Market analyst Stephen Ines, the Chinese central bank continues to steer the currency in a "stable tangent" ahead of the crucial trade talks.
Some forex traders said they will brace for the hard-to-expect results of the October 10-11 meetings before they make any bets on the yuan.
Yuan's one-week contract of implied unpredictability, which weighs investors' estimates for fluctuations in the US currency versus the yuan, was up 5.174 early Tuesday, the highest point since September 5.
The global USD index weakened 98.957 at midday from its previous close of 98.964. As of mid-day, the offshore yuan was trading at 7.1240 per one USD. The American greenback surged 0.15 percent to 107.17 Japanese yen, nearing a one-week peak it reached late Monday. Against a host of other key currencies, the USD was firm at 98.958.