China's yuan steady on strong fix

SHANGHAI, Aug 26 (Reuters) - China's yuan held steady against the U.S. dollar on Tuesday, near a 1-month high, as the country's central bank kept a strong daily fix to ensure stability.

Also helping the yuan was a slightly weaker dollar, after U.S. President Donald Trump said he was removing Federal Reserve Governor Lisa Cook from her position over alleged mortgage fraud.

The spot yuan CNY=CFXS opened at 7.1530 per dollar and was last trading at 7.1558 as of 0315 GMT, 10 pips lower than the previous late session close and 0.52% weaker than the midpoint.

Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC at 7.1188 per dollar, 482 pips firmer than a Reuters' estimate. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.

The PBOC has been setting a much stronger yuan fix than Reuters estimates over the past month.

The stronger fixes suggest authorities may be paving the way for a modest strengthening of the yuan against the dollar in the near term, analysts at Commerzbank said in a note.

"If this goes hand in hand with a weak U.S. dollar, it is of course still possible that the CNY will continue to depreciate against the euro," they wrote.

The CFETS yuan index .CFSCNYI, a gauge that measures the yuan's weighted value against 25 currencies of trading partners, was down nearly 5% year-to-date, according to Reuters' calculations based on official data.

Senior Chinese negotiator Li Chenggang is heading to Washington this week for trade talks with the United States, the Wall Street Journal reported on Monday.

"This could be seen as a positive signal that a summit could be held for President Xi Jinping and Trump later this year," Maybank analysts said in a note.

"Price action (for the offshore yuan) remained stuck within 7.15-7.20, with vol suppressed by the daily fix."

The offshore yuan traded at 7.1565 yuan per dollar CNH=, up about 0.04% in Asian trade.

The dollar index =USD, which measures the U.S. currency against six peers, was 0.099% lower at 98.37.

LEVELS AT 0315 GMT