PBOC Continues To Push Back Against Yuan Depreciation, Greenback Loses Ground

The FX space showed a limited initial reaction to China's official PMI figures which printed marginally above the expected levels. Still, e-mini contracts extended their earlier gains and U.S. Tsy yields crept higher as the session progressed, suggesting that the data may have supported market confidence to a degree, even if broader volatility remained subdued.

• USD/CNH gradually lost altitude and USD/CNY slid under the CNY6.90 mark. The PBOC continued to lean against depreciation impetus via its USD/CNY mid-point fixing, which was set 177 pips below the average sell-side estimate today. This comes on the heels of Tuesday's 249-pip miss, the second-strongest pushback on record.
• Yuan strength spilled over into the Antipodeans, pushing the Aussie dollar to the top of the G10 scoreboard. This allowed AUD/USD to claw back some of its Tuesday's losses, when the AUD was the worst performer among major currencies.
• The greenback went offered across the board despite slightly firmer U.S. Tsy yields. The BBDXY held the prior day's range amid the absence of any wide price swings across G10 currency pairs.
• Flash EZ CPI & German jobless rate, U.S. ADP employment report & MNI Chicago PMI, as well as Canadian GDP are set to take focus on the data front.
• The central bank speaker slate includes Fed's Mester & Bostic and Riksbank's Breman. Dallas Fed will hold an event to introduce its new President.