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Yuan off 5-month high as Sino-U.S. disputes dent sentiment

    SHANGHAI, Aug 7 (Reuters) - The yuan on Friday eased from a
five-month high hit a day earlier as deteriorating Sino-U.S.
relations dented investor sentiment, and the U.S. was broadly
stronger against major currencies.
    U.S. President Donald Trump issued executive orders on
Thursday banning any U.S. transactions with ByteDance, the
Chinese company that owns video-sharing app TikTok, and Tencent
, owner of the WeChat app, starting in 45 days.

    Iris Pang, Greater China economist at ING in Hong Kong, said
China's technology war with the United States could hurt
long-term Chinese economic growth and the yuan's strength.
    "We expect the technology war to persist for the rest of the
year, which will continue to affect the yuan's performance," she
said in a note.
    Gao Qi, FX strategist at Scotiabank in Singapore warned
there were growing risks that tensions could increase ahead of
the U.S. presidential election in November, while noting that a 
military conflict was in neither side's interest.
    Several yuan traders said they would be paying close heed to
the upcoming review of the U.S.-China trade deal on Aug.15.
    The onshore yuan opened at 6.9559 per dollar and
was changing hands at 6.9723 at midday, 185 pips weaker than the
previous late session close. The spot yuan hit a high of 6.9350
per dollar on Thursday, the strongest level since March 10.
    Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate at 6.9408 per dollar, 30 pips
or 0.04% firmer than the previous fix of 6.9438, and was the
strongest since March 10.
    By midday, the global dollar index rose to 93.11 from
the previous close of 92.816. 
    The offshore yuan was trading at 6.9679 per dollar.
    
    The yuan market at 0407 GMT: 
    
    ONSHORE SPOT:
 Item               Current  Previous  Change
 PBOC midpoint      6.9408   6.9438    0.04%
                                       
 Spot yuan          6.9723   6.9538    -0.27%
                                       
 Divergence from    0.45%              
 midpoint*                             
 Spot change YTD                       -0.13%
 Spot change since 2005                18.71%
 revaluation                           
 
    Key indexes:
     
 Item            Current     Previous  Change
                                       
 Thomson         91.55       91.76     -0.2
 Reuters/HKEX                          
 CNH index                             
 Dollar index    93.11       92.816    0.3
 
    
    
*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
morning.

    OFFSHORE CNH MARKET   
  
 Instrument            Current   Difference
                                 from onshore
 Offshore spot yuan    6.9679    0.06%
        *                        
 Offshore              7.125     -2.59%
 non-deliverable                 
 forwards                        
               **                
 
*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 Simon
Cameron-Moore)
  
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