Market News

SHANGHAI, Oct 26 (Reuters) - China's yuan inched higher
against the dollar on Tuesday, as talks between senior Chinese
and and U.S. officials sparked hopes of an improvement in trade
ties, including possible tariff reductions.
    China's Vice Premier Liu He spoke with U.S. Treasury
Secretary Janet Yellen on Oct. 26 via video call and talked
about the macroeconomic situation and bilateral relations,
according to China's commerce ministry.
    The official readouts of the call from both sides encouraged
traders and analysts to hope tensions would ease between the
world's two largest economies, raising chances for possible cuts
to tariffs that were raised at the height of the U.S.-China
trade war.
    "It could also show that inflation pressure was getting too
high in the United States, reducing tariffs could benefit them
too," said Ken Cheung, chief Asian FX strategist at Mizuho Bank
in Hong Kong.    
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.389 per dollar, 34 pips or
0.05% firmer than the previous fix of 6.3924. 
    In the spot market, onshore yuan opened at 6.3845
per dollar and was changing hands at 6.3830 at midday, 26 pips
firmer than the previous late session close.
    Despite glimmersof optimism over Sino-U.S. relations,
traders said it would be hard to see the yuan quickly rising
past the key 6.35 per dollar mark, the strongest level the
Chinese currency hit this year.
    "The yuan probably won't have continued appreciation before
a substantial cut to the tariffs," said a trader at a foreign
bank.
    Separately, investors will pay attention to central bank
meetings include European Central Bank (ECB) and Japan for
possible policy guidance that could affect major currencies in
global markets.
    By midday, the broad dollar index rose to 93.892 from
the previous close of 93.842, while the offshore yuan
was trading at 6.3815 per dollar.