Yuan largely flat, markets focus on Sino-U.S. relations and trade deal review

    SHANGHAI, Aug 10 (Reuters) - The yuan was largely flat on
Monday, as some weakness in the dollar offset investor worries
over a potential flare up in  Sino-U.S. tensions before a
bilateral meeting later this week.
    The world's two largest economies are scheduled to talk on
Aug. 15 to review the trade agreement signed in January, with
tensions running high after U.S. President Donald Trump signed
executive orders banning WeChat and TikTok in 45 days' time and
announcing sanctions on senior Chinese and Hong Kong officials.

    Many traders and analysts said they did not expect the
bilateral meeting to yield meaningful breakthroughs to meet
trade agreement targets. Instead, some believed that Beijing
would react to Washington's latest actions this week.
    "China has only reached about 50% of its Phase 1 trade
commitment until now, so the meeting will be an assessment of
intent rather than a pat on the back for compliance," Stephen
Innes, chief global markets strategist at AxiCorp, said in a
    "Indeed, that is a vast and colossal tail risk given the
market is very 'short' dollars, long CNH." 
    Onshore yuan opened at 6.9644 per dollar and was
changing hands at 6.9671 at midday, 1 pip weaker than the
previous late session close.
    A trader at a Chinese bank said the domestic currency market
was generally in a risk aversion sentiment on Monday morning, as
spot prices swung in a tight range of less than 100 pips.
    "Before the U.S. elections, headline risks related to
China-U.S. tensions are likely to be dominating in the RMB
market, pointing to limited RMB upside," said Ken Cheung, chief
Asian FX strategist at Mizuho Bank in Hong Kong.
    But Cheung expects the recent broad dollar weakness should
help stabilize the yuan at around 7 per dollar in coming months.
    Prior to the market opening, the People's Bank of China
(PBOC) set the midpoint rate at 6.9649 per dollar,
241 pips or 0.35% weaker than the previous fix of 6.9408. 
    The global dollar index fell to 93.329 at midday from
the previous close of 93.421. 
    The offshore yuan was trading at 6.9678 per dollar
as of midday. 
    The yuan market at 0400 GMT: 
 Item               Current  Previous  Change
 PBOC midpoint      6.9649   6.9408    -0.35%
 Spot yuan          6.9671   6.967     0.00%
 Divergence from    0.03%              
 Spot change YTD                       -0.06%
 Spot change since 2005                18.79%
    Key indexes:
 Item            Current     Previous  Change
 Thomson         91.69       91.59     0.1
 CNH index                             
 Dollar index    93.329      93.421    -0.1
*Divergence of the dollar/yuan exchange rate. Negative number
indicates that spot yuan is trading stronger than the midpoint.
The People's Bank of China (PBOC) allows the exchange rate to
rise or fall 2% from official midpoint rate it sets each

 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.9678    -0.01%
 Offshore              7.1217    -2.20%
*Premium for offshore spot over onshore
**Figure reflects difference from PBOC's official midpoint,
since non-deliverable forwards are settled against the midpoint.

 (Reporting by Winni Zhou and Andrew Galbraith; Editing by
Lincoln Feast.)