China Yuan Hits 3-1/2-Year High as Yen Strength Weighs on Dollar

China's yuan has reached a fresh 3-1/2-year high against the US dollar, driven by a stronger central bank fixing and persistent weakness in the dollar. The People's Bank of China set the midpoint rate at 6.7807 per dollar before the market opened, its strongest since February 8, 2023.

The yuan is allowed to trade within a 2% range around this fixed midpoint each day, and it appears that it has taken advantage of this flexibility to reach new heights. The broader weakness in the US currency is also contributing to this trend, as seen in its decline against other major currencies like the Japanese yen.

The yen has held onto its gains from the previous session, putting additional pressure on the dollar ahead of a crucial US jobs report. This report will likely have a significant impact on market sentiment and could potentially influence the direction of currency exchange rates.