On Tuesday, PBOC set the Chinese yuan’s official midpoint rate at the highest level seen since a month, a positive sign indicating a possible resolution of the US-China trade war. The official yuan midpoint rate was fixed at 7.0708 against the US dollar early on Tuesday, 17 pips above Monday’s level. This is the strongest level for the midpoint rate since mid-September.

For the past couple of weeks until now, the PBOC had kept the official midpoint rate steady at 7.0370 per dollar ahead of the trade talks with the US. Since the announcement of the Phase 1 trade deal, USD/CNH has traded somewhat steady closer to the key level of 7 than previously as market sentiment is boosted in the hopes of an end to the trade war.

Although both sides have indicated that there is more work to be done, both US and Chinese officials have indicated interest in continuing negotiations before the interim trade deal is expected to be signed a few weeks from now.