USD/CNH Back Close To 20-day EMA Support Level, Official May PMIs Out Today

USD/CNH got sub 7.2500 late in Asia Pac trade on Thursday (lows of 7.2477), before consolidating somewhat. We track near 7.2500 in early Friday dealings, after posting a 0.27% gain for Thursday's session. This was broadly in line with the BBDXY's 0.23% dip (the DXY fell 0.36%). USD/CNY also pulled away from recent higher, the pair back to 7.2327 by the end of Thursday's session.

• The yuan was aided by yesterday's PBoC commentary around a 'powerful currency' and reiterating the stable backdrop. Bloomberg also reports of reported dollar selling in the offshore yuan market by China institutions. It was also noted that companies in some provinces were being discouraged from making large or bulk foreign exchange purchases.
• Another source of support came after the PBoC confirmed that it will sell low risk bonds (including government bonds) when necessary, while paying close attention to bond market conditions and any potential risks.
• A softer US yield backdrop (amid weaker data outcomes), which unfolded as the US session progressed, also helped CNH, although the bulk of the currency's gains came before these US trends emerged.
• For USD/CNH, we are close to the 20-day EMA (around 7.2485), below this the 50-day EMA sits back near 7.2410. Recent highs are at 7.2759.
• Locally today we have the official PMI prints for May. The indices are expected to tick higher (see here for more details).