SHANGHAI, Nov 19 (Reuters) - China's yuan dipped on Thursday, pulling back from near 29-month highs on dollar buying, but analysts and traders said they expected the currency's appreciation to resume as rising expectations for easing weigh on the greenback. The softer yuan came despite a stronger fixing by the central bank. Before the market open, the People's Bank of China set the midpoint rate of the yuan's daily trading band at 6.5484 per dollar, its firmest level since June 26, 2018. The yuan's domestic trading session close, used to calculate the daily fixing, was 6.5425 per dollar on Wednesday, its strongest level since June 25, 2018. Spot yuan opened at 6.5640 per dollar and was changing hands at 6.5667 at midday, 77 pips weaker than Wednesday's late session close. A trader at a foreign bank said that the strong yuan had prompted dollar buyers to enter the market. "But with the continued development of the pandemic, and with vaccines not coming so quickly, non-U.S. currencies including the yuan are performing well," he said. With possible additional Fed easing driving dollar weakness, the market will be watching the development of novel coronavirus vaccines, the trader added. The global dollar index stood at 92.485 on Thursday, up slightly from Wednesday's close of 92.474. A surge in novel coronavirus infections in the United States could slow growth, and the U.S. central bank will use all of its tools to bring the economy back to "full strength", New York Federal Reserve Bank President John Williams said Wednesday. The U.S. death toll from COVID-19 passed 250,000 and COVID-19 hospitalisations hit a new high on Wednesday as a rise in cases prompted fresh lockdown measures throughout the country. The offshore yuan was little changed at 6.5628 per dollar from a close of 6.5629 on Wednesday. "Current levels present a no-man's land in the near term for this pair," said Terence Wu, a strategist at OCBC in Singapore. "With the USD soggy, a long USD-CNH would be hard to justify." The yuan market at 4:05AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.5484 6.5593 0.17% Spot yuan 6.5667 6.559 -0.12% Divergence from 0.28% midpoint* Spot change YTD 6.04% Spot change since 2005 26.04% revaluation Key indexes: Item Current Previous Change Thomson 95.96 96.09 -0.1 Reuters/HKEX CNH index Dollar index 92.485 92.474 0.0 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.5628 0.06% * Offshore 6.7473 -2.95% non-deliverable forwards ** *Premium for offshore spot over onshore **Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint. . (Reporting by Andrew Galbraith and Jindong Zhang; Editing by Stephen Coates)
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