SHANGHAI: China's yuan firmed slightly on Tuesday as the dollar eased after Iran and Israel said they had halted attacks on each other for now, while China's better-than-expected trade data also aided sentiment.
The onshore yuan firmed roughly 0.07% in late morning trading, changing hands at around 6.7790 per dollar.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, eased 0.015% to 99.98 by 0337 GMT, not far from a two-month high of 100.21 it struck on Monday.
"The Middle East conflict has calmed down after a temporary escalation, impacting the dollar index slightly," Nanhua Futures said in a report.
"But the news has not shaped a clear direction for the dollar," the brokerage said, adding key indicators to watch ahead include U.S. inflation and employment data.
Regarding the yuan, traders need to closely monitor export and financial data, as signs of economic weakening would undercut the currency's strength, Nanhua Futures said.
Data released on Tuesday showed China's exports picked up pace in May, as earlier front-loading by overseas buyers to pre-empt the energy costs of the war in Iran fed through to shipments, while steady appetite for semiconductors and AI hardware lent additional support. Both exports and imports topped estimates from economists.
Meanwhile, a Reuters poll showed that China's new bank lending likely rose to 550 billion yuan ($81.08 billion) in May, following a surprise contraction of 10 billion yuan in April and as the Chinese central bank pushes for more lending.
Nanhua Futures is advising its exporter clients to swap foreign currency receipts into yuan at 6.83 per dollar, and importers to buy the dollar at 6.77-per-dollar level.
Prior to market open on Tuesday, China's central bank set the yuan's guidance rate at 6.8147 per dollar, the strongest level in more than three years. - Reuters
