(Adds comments and table, updates prices) SHANGHAI, Oct 9 (Reuters) - The yuan leapt to a 17-month high against the dollar on its first trading day after a week-long national holiday and was set for its strongest one-day gain since 2005, when Beijing de-pegged its currency from the greenback. Market sentiment was boosted as U.S. Democratic presidential candidate Joe Biden widened his lead over President Donald Trump in a raft of new polls. Currency traders said the results were positive for the yuan as many investors expect a Biden Administration to drop a unilateral tariff approach in its dealings with China, lowering the risk of a fresh trade war. Trade disputes between the United States and China have been the key factor weighing on the yuan in recent years. Friday's steep gain also came as the currency played catch-up to its offshore counterpart after the Golden Week holiday, and was guided higher by the central bank, traders and analysts said. The onshore spot yuan opened at 6.7300 per dollar and jumped to a high of 6.7089 at one point in morning trade, the strongest level since April 23, 2019. It was changing hands at 6.7126 at midday, 864 pips or 1.29% firmer on day, marking the biggest one-day rise since July 2005 when China revalued its currency by 2.1% and dropped a decade-old peg against the dollar. "Today's CNY fixing had a strong bias ... I think the main message is that the PBOC is allowing further renminbi appreciation at this level, so markets are positioning for a renminbi rally," said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong. "The U.S. election is another driver ... Polls are showing that Biden is taking the lead," Cheung said. "It means the risks of resuming a new trade war are getting smaller, so I think this is positive for the renminbi." Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 6.7796 per dollar, 109 pips firmer than Reuters' estimate of 6.7905. "China reopened today to a festive risk-on mood, so we should expect a strong move higher with a focus on domestic consumption, tourism, renewable energy," said Stephen Innes, chief global markets strategist at Axi. Official data showed a rebound in consumer spending over the Golden Week holiday, suggesting continued economic recovery from coronavirus shock. The Ministry of Commerce said on Thursday that daily retail sales between Oct. 1-8 rose 4.9% from a year earlier. As of midday, the global dollar index fell to 93.451, while the offshore yuan was trading at 6.7048 per dollar. The yuan market at 0400 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.7796 6.8101 0.45% Spot yuan 6.7126 6.799 1.29% Divergence from -0.99% midpoint* Spot change YTD 3.73% Spot change since 2005 23.30% revaluation Key indexes: Item Current Previous Change Thomson 95.07 94.79 0.3 Reuters/HKEX CNH index Dollar index 93.451 93.549 -0.1 *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 6.7048 0.12% * Offshore 6.871 -1.33% 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 Winni Zhou in Shanghai and Tom Westbrook in Singapore; Editing by Sam Holmes and Richard Pullin)
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