Yuan steady as dollar slips on US rate cut bets; China data eyed

SHANGHAI, Aug 13 (Reuters) - China's yuan held steady against the dollar on Wednesday, as the greenback weakened overnight on growing expectations of U.S. interest rate cuts, while investors awaited key Chinese economic indicators due later this week.

The dollar weakened after a tame reading on U.S. inflation bolstered expectations of a Federal Reserve rate cut next month, with President Donald Trump's attempts to extend his grip over U.S. institutions also undermining the currency.

"Against this backdrop, and with the extension of the US-China tariff truce for another 90 days, Asian FX is likely to remain broadly supported," analysts at MUFG said in a note.

Trade ties between the United States and China have remained a key driver of yuan moves this year. A 90-day extension of their tariff truce has helped ease uncertainty around the currency pair during the period.

U.S. trade officials will meet again with their Chinese counterparts within the next two or three months to discuss the future of the economic relationship between the two countries, Treasury Secretary Scott Bessent said on Tuesday.

Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 7.1350 per dollar, 409 pips firmer than a Reuters' estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

The broad firming trend in the daily yuan fixing also suggested the PBOC aims to keep yuan depreciation expectations contained, MUFG analysts said.

The spot yuan CNY=CFXS opened at 7.1820 per dollar and was last trading at 7.1824 as of 0318 GMT, 5 pips firmer than the previous late session close and 0.66% weaker than the midpoint.

Separately, markets are also awaiting China's credit growth and retail sales data this week to get a clearer picture of the health of the broader economy.

China will offer interest subsidies for businesses in eight consumer service sectors including catering and tourism, in a bid to support services consumption amid a slowing economy.

The offshore yuan traded at 7.1845 yuan per dollar CNH=, up about 0.02% in Asian trade.

The dollar index =USD, which measures the currency against six others, was 0.003% lower at 98.04.

Key onshore vs offshore levels:

• Overnight dollar/yuan swap onshore -5.83 pips vs. offshore -5.83

• Three-month SHIBOR SHIBOR= 1.5% vs. 3-month CNH HIBOR 1.7% LEVELS AT 0318 GMT