China's yuan eases to 7-month low on weak fixing, hawkish Fed

The spot yuan opened trading at 7.2620 per dollar and subsequently closed 31 pips lower compared to the previous late-session close. It now stands 1.98% weaker than the midpoint rate. Overnight, the U.S. dollar strengthened following hawkish comments from officials and positive data indicating stability in the U.S. housing market. These factors suggest that the Federal Reserve may not rush to initiate a cycle of . Traders are now closely monitoring the upcoming release of the U.S. personal consumption expenditures (PCE) price index on Friday, which is considered the Fed's preferred measure of . Economists polled by Reuters anticipate that annual growth in the PCE index eased to 2.6% in May.

The yuan has experienced a 0.3% decline against the dollar this month and has depreciated by 2.3% since the beginning of the year. This decline can be attributed to various domestic challenges, including a stagnant property sector, weak consumer spending, and declining yields. These factors have led to capital outflows from the yuan and deterred foreign investors from participating in China's struggling stock market. Offshore, the yuan traded marginally lower at 7.2909 yuan per dollar during Asian trading hours. Meanwhile, the dollar's performance against a basket of six major currencies showed a slight decrease, settling at 105.66 by 03:09 GMT.