By Summer Zhen
       HONG KONG, July 11 (Reuters) - China's yuan slightly
firmed against the dollar on Thursday, as the greenback
struggled for direction after the U.S. Federal Reserve indicated
it is getting closer to cutting interest rates. 
    Fed Chair Jerome Powell sent some dovish hints on rate
policy when making comments during testimony to Congress this
week, raising market hopes for a rate cut later this year.

By 0353 GMT, the yuan was 0.08% higher at 7.2705
to the dollar after trading in a range of 7.2689 to 7.2760.
    Still, the currency hovered near an almost eight-month low
made on Wednesday after sluggish Chinese inflation data.
    Weak inflation calls for larger-scale policy support to be
announced during the crucial third plenary session next week,
analysts with DBS said.
    More support for economy and the ailing housing sector
should lift the yuan, they said. 
    Prior to the market opening, the People's Bank of China set
the midpoint rate, around which the yuan is allowed
to trade in a 2% band, at 7.1339 per dollar, 1,391 pips firmer
than a Reuters' estimate.
    The central bank has been gradually lowering its daily yuan
official guidance, well within market projections, but with a
bias suggesting it is allowing some depreciation, traders and
analysts said. 
    The spot yuan opened at 7.2738 per dollar, and
was last trading 54 pips firmer than the overnight close and
1.91% weaker than the midpoint.
    The yuan has weakened 2.3% so far this year. It has been
under pressure since early 2023 as domestic woes around a
moribund property sector, anaemic consumption and falling yields
drive capital flows out of yuan, and foreign investors stay away
from its struggling stock market.
    On his second day of testimony on Wednesday, Powell said he
was not ready to conclude that inflation is moving sustainably
down to 2% though he has "some confidence of that."
    Market focus now shifts to the June U.S. consumer price
index (CPI) to be announced on Thursday to get clearer clues on
rate cut roadmap.
    Based on Thursday's official guidance, the yuan is allowed
to drop as far as 7.2766.
    The offshore yuan traded at 7.2856 yuan per dollar,
up about 0.08% in Asian trade.
    The dollar's six-currency index was 0.038% lower at 
104.93. 
    Key onshore vs offshore levels:
Overnight dollar/yuan swap onshore -7.90 pips vs. offshore -7.90
Three-month SHIBOR 1.9 % vs. 3-month CNH HIBOR 3.2 %
LEVELS AT 0351 GMT 
    
 INSTR  CURRE  UP/DO  %      DAY'S  DAY'S
 UMENT  NT vs  WN(-)  CHANG  HIGH     LOW
        USD    VS.    E             
               PREVI  YR-TO         
               OUS    -DATE         
               CLOSE                
               %                    
 Spot   7.270   0.08  -2.32  7.268  7.276
 yuan   5                        9  
                                 
 

 (Reporting by Summer Zhen; Editing by Sherry Jacob-Phillips)