Home Economy China’s yuan firms as dollar drops on U.S. rate outlook

China’s yuan firms as dollar drops on U.S. rate outlook

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    SHANGHAI, May 18 (Reuters) - China's yuan strengthened on
Tuesday as investors tempered earlier expectations that the U.S.
central bank could hike interest rates soon, weighing on the
dollar.
    But traders said a robust U.S. economic recovery and strong
commodities would put a floor under a falling dollar index.
    "There's likely to be a limit to the downside for the U.S.
dollar," said a trader at a foreign bank, adding that the
greenback was biased toward rangebound fluctuation. "The yuan
also shouldn't have far to run."
    Dallas Federal Reserve President Robert Kaplan on Monday
reiterated that he does not expect interest rates to rise until
next year, fuelling a further decline in bets that inflationary
pressure could force the Fed to act sooner.
    That put a drag on the dollar, which had earlier rallied on
expectations that the Fed could move to raise rates in response
to hotter-than-expected inflation data. The global dollar index
 fell...

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