China's yuan little changed against US dollar on tariff caution
China's services activity expanded at its fastest pace in 14 months in July fuelled by stronger demand, including a rise in new export orders.
Meanwhile, markets were still watching if Trump will decide to extend a trade truce with China that expires on August 12, or potentially let tariffs shoot back up to triple-digits.
'The key swing factor will be the outcome of the U.S.-China trade negotiations,' analysts at UOB said, adding that they project the USD/CNY rate to reach 7.17 in the fourth quarter of 2025 and 7.10 by the second quarter of 2026.
By 0517 GMT, the yuan was 0.03% lower at 7.1820 to the dollar after rebounding from 2-month low in previous session.
The offshore yuan traded at 7.184 yuan per dollar, up about 0.01% in Asian trade.
The offshore yuan wavered as markets also responded to Trump threatening secondary sanctions against countries purchasing Russian oil including China, with Russia facing an August 8 deadline to reach a Ukraine ceasefire deal, Citi analysts said.
Prior to the market opening, the People's Bank of China set the midpoint rate at 7.1366 per dollar, the strongest since November last year and 301 pips firmer than a Reuters' estimate.
The spot yuan is allowed to trade up to 2% on either side of the fixed midpoint each day. Based on Tuesday's official guidance, the yuan is allowed to drop as far as 7.2793.
The U.S. dollar wavered on Tuesday as the rising odds of Federal Reserve rate cuts weighed on sentiment, while investors assessed the broader economic impact of U.S. tariffs unleashed last week.
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