Yuan Pauses Near 3-1/2 Year High as Traders Wait on US Inflation Data

China's yuan touched a 3-1/2-year high but paused near 6.7110 per dollar as traders waited for US inflation data that could influence the Federal Reserve's next rate decision.

The yuan's run-up has been helped by stronger trade momentum, with China's exports accelerating last month to a 25% increase from a year earlier, according to Huatai Futures. Exporters converting dollar sales into yuan added extra demand, but Beijing seems hesitant to let the currency appreciation become one-way.

The People's Bank of China set Tuesday's daily midpoint at 6.7804 per dollar, roughly 700 pips weaker than Reuters' forecast, one of the biggest gaps since February. This 'weaker fix' can cool enthusiasm by signaling that Beijing is willing to lean against fast appreciation, keeping moves choppier and more two-way.