China’s yuan was little changed against the US dollar on Wednesday as traders and investors awaited a news conference by US President-elect Donald Trump later in the day for clues on his policies on spending, global trade and currencies.

Expectations of higher fiscal spending and interest rates under Trump have pushed the US dollar index to a 14-year peak, putting emerging market currencies such as the yuan under intense pressure from capital outflows.

During the election campaign, Trump also vowed to label China a currency manipulator on his first day in office on January 20 and slap punitive tariffs on Chinese exports to the United States.

Authorities in Beijing moved aggressively in the opening days of the new year to steady the currency to quash speculation that it was on a one-way depreciation trend.

The People’s Bank of China set the midpoint rate at 6.9235 per dollar prior to the market open on Wednesday, weaker than the previous fix of 6.9234.

In the spot market, the yuan opened at 6.9253 per dollar and was changing hands at 6.9258 at midday, 13 pips weaker than the previous late session close and 0.03 per cent weaker than the midpoint.

“There is no clear direction where the yuan will move,” said a trader at a Chinese bank in Beijing.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 96.14, weaker than the previous day’s 96.16.

The dollar trod water early on Wednesday, showing little inclination to move against major peers such as the euro and yen before Trump’s news conference.

Despite recent yuan strength in both onshore and offshore markets amid surging offshore yuan borrowing rates, market players remain bearish on the yuan’s outlook.

“I see a sooner-rather-than-later test of the 7 level, which could occur after the Lunar New Year break, when interbank dealers will likely stoke their depreciation engines,” said Stephen Innes, a senior trader at OANDA.

The week-long Lunar New Year holiday will start at the end of this month.

The offshore yuan was trading 0.38 per cent stronger than the onshore spot at 6.8995 per dollar.

The spread between onshore and offshore spot yuan has narrowed to less than 300 pips from nearly 1,000 pips seen last week.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 7.1864, or 3.66 per cent weaker than the midpoint.

One-year NDFs are settled against the midpoint, not the spot rate.

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