Yuan steady against dollar as market focuses on Ukraine talks, Fed
The yuan traded in a narrow range on Tuesday, with the onshore rate edging 0.03% higher to 7.1832 per dollar by 0321 GMT.
The offshore yuan traded at 7.1865 yuan per dollar, up about 0.02%.
Prior to the market opening, the People's Bank of China set the midpoint rate at 7.1359 per dollar.
That was slightly weaker than the level set in the previous session, which was strongest in nine months, but still 487 pips stronger than Reuters' estimate.
The spot yuan is allowed to trade up to 2% either side of the fixed midpoint each day. Based on Tuesday's official guidance, the yuan is allowed to drop as far as 7.2786.
The yuan is up 0.2% against the dollar this month and 1.6% so far this year as trade tensions with the US eased.
The PBoC is likely to remain cautious about fast yuan appreciation given lingering trade and export uncertainty, weak domestic demand and thin corporate margin, analysts at Goldman Sachs wrote in a note.
'A likely Fed (rate) cut in September and potential Xi-Trump meeting are catalysts for further RMB appreciation into year end,' they said, adding that USD/CNH could gradually head to 7.1 over the next one to two months, and to 7.0 by year-end.
Meanwhile, the dollar's six-currency index was steady on Tuesday, as investors watched for any signs of progress in US President Donald Trump's meetings with Ukraine President Volodymyr Zelenskiy and European leaders, though a peace deal with Russia still appeared far from imminent.
Traders are also awaiting any policy hints from the Federal Reserve ahead of its annual gathering in Jackson Hole, Wyoming, later this week.
Elsewhere, the Hong Kong dollar strengthened to as much as to 7.7990 against the greenback, the strongest level since May 13.
The Hong Kong Interbank Offered Rate (HIBOR), a key barometer of liquidity, also rose across the board, with key tenors rising to levels last seen in May after repeated intervention by the city's de-facto central bank.
Key onshore vs offshore levels:
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