The Chinese yuan strengthened against the dollar in sluggish holiday trading on Monday, with investors waiting for economic data to be released this week to gauge the impact of the Chinese authorities’ decision to lift anti-corruption restrictions.

The dollar to yuan rate on the mainland market rose 0.21% to 6.9733, while the offshore market rose 0.29% to 6.9846. Before the session opened, the People’s Bank of China announced a median fixed yuan rate of 6.9825 per dollar, slightly weaker than the previous session’s value of 6.9810.

“The yuan is likely to end the year at current levels and higher relative to the key level of 7 per dollar,” said a trader at a Chinese bank, noting that the market lacked clear guidance due to low trading volumes.

Trading volume fell to $2.6 billion by mid-session, down from a normal level of about $15 billion at the same time of day. Expectedly, the situation was also reflected in the current price of Euro Fx Futures. 

Meanwhile, the number of coronavirus cases in China continues to increase. For example, in Zhejiang province, an industrial center near Shanghai, about a million infected people are recorded daily, a number that could double in the coming days, local authorities said Sunday.

Wing Ting of Brown Brothers Harriman warns that the economy could slow sharply in December.

“The length of the slowdown will depend on how the virus spreads, but the early signs are not good,” he said in a note.

Currency traders say they will keep a close eye on China’s December industrial-sector activity data, expected on Saturday, to determine the damage to the economy from the COVID outbreak.

“The market has been concerned lately about how the overall economy will recover after the pandemic subsides, and high-frequency economic data could be an important guide,” CICC analysts said in a note.

Meanwhile, the dollar index to the DXY basket of major currencies held at 104.325.

Earlier, we reported that global settlements in the renminbi showed record growth in November.