Offshore Yuan Refreshes Session Highs

Spot USD/CNH extended its overnight losses into the European morning after above-forecast Chinese PMIs provided support to the yuan and broader risk sentiment. Sales have just resumed after a brief reprieve, with the pair sliding to CNH6.8634 before stabilising just above there to last trade 875 pips or ~1.3% lower on the day at CNH6.8871. Should the rate slide past the neckline of the recent double bottom pattern (CNH6.7931), bears would eye a deeper sell-off towards key support from Feb 2/Jan 16 lows of CNH6.7057/6.6975.

• Reminder that China's official PMIs came in stronger than expected across manufacturing (52.6 versus 50.6 forecast) and non-manufacturing (56.3 versus 54.9 forecast) sectors. Caixin Manufacturing PMI, which places more emphasis on smaller, private, export-oriented businesses, also came in better than expected at 51.6. Strong data may affect market sentiment ahead of next week's National People's Congress, which may see the announcement of a fresh growth target.
• A strong showing from the redback has provided support to other regional currencies as well as commodity-tied FX space. In Asia, the Indonesian rupiah remains the best performer this year, but bullish CNH/IDR bets could be boosted if the pair punches through its 50-DMA/Feb 8 high at IDR2,230/2,236.