Offshore yuan holds near Feb 2023 highs as USD cools

The offshore yuan steadied around 6.73 per dollar on Monday, hovering near its strongest level since February 2023, supported by a weakening US dollar amid a batch of underwhelming Chinese economic data.

The greenback came under pressure after cooling US economic indicators led investors to further scale back bets of a near-term Federal Reserve rate hike, with markets now pricing in roughly a 67% chance that the Fed will keep rates unchanged in September, up from less than 50% a month ago.

On the domestic front, fixed-asset investment contracted 6.7% year-on-year in the first seven months of 2026, a steeper decline than the 6.2% drop expected by markets.

Moreover, industrial production slowed to 4.5% in July from 5.3% in June, falling short of forecasts for a 5% increase, while retail sales rose just 0.6%, missing expectations of 1.5% and easing from 1.0% growth in the previous month.

Meanwhile, the surveyed unemployment rate edged up to 5.2% in July, the highest level in three months.