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Offshore Yuan Rises After Two-Day Decline

CNH

Offshore yuan is slightly stronger on Thursday, USD/CNH coming off closing highs after a second straight day of gains on Wednesday as the greenback rose again. The pair retreated from the 6.48 level late on Wednesday, last trading down 33 pips at 6.4744 after seeing a range from 6.4659 to 6.4795. Resistance for the pair is seen at 6.50, the level was last breached on August 23, above here is the July high at 6.5287. One-month USD/CNH implied volatility is slightly higher on the day but is off yesterday's highs and languishes around the lowest levels of 2021, while one-month 25 delta risk reversals have risen to 0.53, matching the September highs.

  • As a reminder official manufacturing PMI moved into contractionary territory for the first time since the COVID driven Feb '20 contraction, printing at 49.6 vs. the BBG median of 50.0 and August's 50.1 print. The official non-manufacturing PMI release saw a surprise move back into expansionary territory, hitting 53.2 vs. the BBG median of 49.8 and August's 47.5 print. Caixin manufacturing PMI rose to 50.0 against consensus of 49.5 and a previous of 49.2.

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