Steady CNH Levels Continue, Caixin Manufacturing PMI Today

USD/CNH got to the 7.1725/30 region before Powell push back on a March rate cut saw the pair rebound back above 7.1900. We track near 7.1870 in early Thursday dealings. This left us net unchanged for Wednesday session, which is where we have been all week. USD/CNY finished lower, closing under 7.1700 for Wednesday's session. The CNY NEER (J.P. Morgan Index), edged down slightly to 123.99, off 0.15%.

• 1 month implied vol in USD/CNH sits under 4%, well off early Jan highs near 6%. We are above early Nov lows from last year though of sub 3.5%.
• The authorities may look to contain yuan volatility into the LNY period, which kicks off next Friday the 9th of Feb.
• CNH broadly followed USD gyrations around the FOMC announcement and Chair Powell's press conference. Like USD/JPY though, USD/CNH looks a little high relative to the US yield pull back.
• Still, growth concerns and equity weakness may see yuan sentiment remain cautious in the near term. Onshore equities finished lower yesterday (CSI 300 off 0.91%), while in US trade, the Golden Dragon index was around flat in Wednesday US trade.
• BBG noted that China's top 100 developers saw contract sales down 34.2% y/y for Jan, suggesting continuing property headwinds.
• Today we have the Caixin manufacturing PMI today. The market expects a 50.8 outcome, unchanged from the prior Dec read.