USD/CNH Maintains Recent Ranges, 1yr MLF Expected To Be Cut By 10bps Today

USD/CNH recovered strongly post the FOMC in the NY session, from lows near 7.1500, we got back close to 7.1800 late in NY dealings. However, we didn't breach the 7.1800 handle and make fresh highs. We currently track close to 7.1740, with CNH unchanged for Wednesday's session. USD/CNY spot closed just under 7.1620, while the CNY NEER (J.P. Morgan Index) edged down a little further to 121.16 (-0.06%).

• The US-CH 2yr government yield spread is close to cyclical highs, near +260bps, in the aftermath of the Fed's hawkish forward guidance. China's 2yr bond yield isn't seeing as much downside as the backend though, with the 10yr yield hitting 2.60% yesterday, which was sub 2022 lows.
• Today the focus will be on the MLF decision, with a 10bps cut expected (taking the rate to 2.65%), while volumes are projected to be 200bn yuan (125bn prior). We also have the May activity data, which is projected to be softer (see this preview for more details).
• US Secretary of State Blinken will travel to China this week (June 16-19). There was some concern the trip may not happen after yesterday's phone call with the China Foreign Minister.
• Bill Gates will also reportedly meet with President Xi on Friday, the latest in a series of high profile US business executives to visit the country.