China’s yuan jumped to a two-month high against the dollar on Monday, boosted by signs of progress in Sino-US trade negotiations that raised hopes for an end to the long trade war. Both onshore and offshore yuan strengthened more than half a per cent in morning trade, a dramatic move for a currency that usually wavers in a wafer-thin range. United States President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, though officials on both sides said much more work needed to be done. “China and the US managed to reach the substantial phase one trade deal, offering a respite for investors worrying about the outbreak of full-blown war,” Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong said. The onshore spot market opened at 7.0827 per dollar and jumped to a high of 7.0494 at one point in morning trade, the strongest since August 19. As of midday, the spot rate was changing hands at 7.0517, 373 pips stronger than the previous late session close. If it holds the gains at the late night close, it will become onshore yuan’s best session in around a month. Several traders said whether gains in the yuan will be sustained, depends largely on developments in trade negotiations in the near term. Trump and Chinese President Xi Jinping are both scheduled to attend the summit of the Asia Pacific Economic Cooperation (APEC) countries in Chile next month. Trump hinted that a written agreement could be signed there. A trader at a Chinese bank expects the yuan to trade in a range of 7.0 to 7.1 per dollar before the Trump-Xi summit. “The market will watch closely whether a partial deal will be documented in the next one month for both leaders to sign officially in mid-November,” said Tommy Xie, head of Greater China research at OCBC Bank in Singapore. Investors had speculated whether the central bank would lift its official yuan midpoint fixing on Monday, as the deal between the world’s two largest economies had also touched on currency. The partial deal covers agriculture, currency and some aspects of intellectual property protections. However, the People’s Bank of China (PBOC) set the midpoint rate at 7.0725 per dollar prior to market open, just 2 pips firmer than the previous fix of 7.0727. Monday’s fixing, similar to what had happened in the past month, continued to be set at around the 7.0370 per dollar level and remained slightly stronger than market projections. The guidance rate did not send “the clearest of signals that the PBOC will soon embark on a stronger yuan policy,” Stephen Innes, Asia Pacific market strategist at AxiTrader said in a note. “Before jumping to conclusions, we need to monitor the reference rates for the rest of the week and beyond.” Mizuho’s Cheung said he reckons the PBOC is likely to keep the yuan stable until the APEC summit before officially signing the currency pact. The global dollar index rose to 98.408 at midday from the previous close of 98.301. The offshore yuan was trading at 7.052 per dollar as of midday.