1 month ago
Forex

Yuan Gains Despite Weak Industrial Profit; U.S. Dollar Slips Ahead of Fed

Investing.com - The Chinese yuan gained on Monday in Asia even after official data showed China’s industrial profits fell for

Investing.com - The Chinese yuan gained on Monday in Asia even after official data showed China’s industrial profits fell for the second straight month. The U.S. Dollar traded slightly lower amid dovish Fed expectations.

The USD/CNY pair was down 0.1% to 6.7374 at 1:21 AM ET (06:21 GMT). The gain in yuan came even after the National Bureau of Statistics reported earlier in the morning that profits of big Chinese industrial companies fell 1.9% on year to 680.83 billion yuan ($100.94 billion) in December.

In November, industrial profits declined 1.8% from a year earlier. It was the first contraction in profits in nearly three years.

For the full year of 2018, China's industrial profit rose 10.3% to 6.64 trillion yuan ($986.37 billion), easing from 2017's 21%.

The weak data, however, has not had any bearish impact on the yuan.

The People's Bank of China (PBOC) set the yuan reference rate at 6.7472 today vs the previous day's fix of 6.7941.

Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.1% at 95.400.

The Fed will conclude its two-day policy meeting on Wednesday and is widely expected to hold rates steady after raising them in December for the fourth time in 2018. The U.S. central bank has indicated that it will hike rates twice this year, but some officials have taken a more dovish tone on further monetary tightening over the past two months or so, putting the dollar under pressure.

Powell also announced that he would hold a press conference after each policy meeting, a change from the previous quarterly schedule.

Meanwhile, the ongoing trade negotiations between the U.S. and China will also be in the spotlight as Chinese officials will arrive in Washington on Wednesday to continue trade talks with the U.S. aimed at resolving the long-running trade war between the two countries.

Traders will be watching for any hints of progress as the two sides try to agree on a deal before a deadline on March 1. If a deal is not reached by then, the U.S. could raise the tariff rates on $200 billion worth of Chinese goods to 25% from 10%.

Elsewhere, the USD/JPY pair was down 0.2% at 109.34, while the AUD/USD pair and the NZD/USD pair gained 0.1% and 0.3% respectively.