Updates with domestic closing prices
SHANGHAI, Oct 16 (Reuters) - The onshore yuan CNY=CFXS extended gains on Friday to end the domestic trading session at an 18-month high of 6.6982 against the dollar, underpinned by promising recent economic data.
Trade and credit lending data this week suggested the world's No.2 economy was recovering faster than expected from the coronavirus shock. Market participants are now waiting for third-quarter GDP data, due next Monday, for more trading cues.
China's economy is expected to have grown 5.2% in July-September from a year earlier, faster than the second quarter's 3.2%, a Reuters poll shows.
"With the nation leading in the recovery, China's GDP, retail sales and industrial production data will be critical to the confirmation of the resilience seen in Asia/dollar," ANZ said in a note.
Some currency traders said their corporate clients showed rising interests in liquidating long-dollar positions on Friday to limit exchange losses as they expect the yuan to rise further.
"The yuan continues to power ahead, driven by stock and bond inflows, as the USD/CNH shifts back into maximum down channel overdrive," Stephen Innes, chief global markets strategist at AxiCorp said in a note.
The currency retreated from a 17-month high earlier this week after the People's Bank of China scrapped the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading. The adjustment effectively lowered the cost of shorting the unit. CNY/
"While the PBOC no longer discourages outflows via the FX reserve, it is not encouraging outflows either; hence the stance on spot CNY is best described as neutral," said Frances Cheung, head of macro strategy for Asia at Westpac in Singapore.
"We maintain the view for rangetrading in the coming weeks and our year-end target for USD/CNY at 6.75, and 6.5 before end-2021."
Bets in favour of the yuan rebounded after a sharp pullback earlier this month, a Reuters poll showed.
(Reporting by Winni Zhou and Andrew Galbraith; Editing by Himani Sarkar, Aditya Soni)
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