China's yuan weakens slightly as traders eye Fed policy prospects

[SHANGHAI] China's yuan weakened marginally Friday as the dollar traded sideways, with mainland currency traders awaiting an important speech by US Federal Reserve Chair Janet Yellen later today.

"Ahead of Yellen's speech, traders refrained from quoting the yuan/dollar rates aggressively," said a trader at a Chinese commercial bank in Shanghai.

"Volatility is expected to increase next week after the market gets hints from Yellen's speech."

Global central banker will be gathering in Jackson Hole, Wyoming, where Ms Yellen will make a speech on Friday, which markets expect will provide fresh clues on the US monetary policy outlook.

Markets have been on edge in recent weeks as some Fed officials raised the prospects of a US rate hike as early as September.

The People's Bank of China set the midpoint rate at 6.6488 per US dollar prior to market open, firmer than the previous fix 6.6602.

The spot market opened at 6.6549 per US dollar and was changing hands at 6.6647 at midday, 38 pips weaker than the last close and 0.24 per cent below the midpoint.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 94.43, weaker than the previous day's 94.62.

The global dollar index fell to 94.657 from the previous close of 94.772.

The offshore yuan was trading 0.22 per cent softer than the onshore spot at 6.6795 per US dollar.

REUTERS