An improvement in trade relations between the US and China has boosted the market sentiment and driven the PBOC to fix the Chinese yuan’s official midpoint rate at the highest level in more than two months. On Tuesday, the PBOC set the yuan’s midpoint rate at 7.0617 against the US dollar.

Over the past few days, both the US and China have confirmed that negotiations are progressing well towards the “Phase 1” trade deal. On Monday, markets were buoyed by Trump’s comments that the interim trade deal could even be signed ahead of schedule.

High level phone discussions between US and China trade teams have driven China to not only agree to import more US farm goods, but has also resulted in the US looking into ways to exempt certain tariffs on Chinese imports. At the time of writing, USD/CNH is trading steady at around 7.054 after slight bearishness earlier in the day over a strengthening yuan.