USD/CNH renews a multi-day high as China’s central bank surprises markets with a rate cut during early Tuesday. That said, the People’s Bank of China (PBoC) cuts the Repo Rate to 1.9% from 2.0% and propel the offshore Chinese Yuan (CNH) price towards 7.1750, the highest level since late November 2022, around 7.1710 by the press time.

With the rate cut from the PBoC confirming the previous fears suggesting a slower economic growth in the world’s biggest industrial player, Bloomberg said, “China’s central bank cut a short-term policy interest rate, easing its monetary stance to help aid the economy’s recovery.”

Adding strength to the USD/CNH pair could be the market’s fears of more tension between the US and China as the US expands its ban on imports from Xinjiang. China vows to protect China firms against any US sanctions, per Reuters. Recently, Bloomberg released prepared remarks of US Treasury Secretary Janet Yellen’s scheduled Testimony in front of the House Financial Services Committee as she said that the International Monetary Fund (IMF) and the World Bank (WB) serve as important counterweights to non-transparent, unsustainable lending from others, like China.

It should, however, be noted that the market’s fears of dovish Fed performance in Wednesday’s Federal Open Market Committee (FOMC) joins downbeat US Treasury bond yields to cap the USD/CNH upside.

Amid these plays, the S&P500 Futures struggles to trace Wall Street’s gains while the US 10-year and two-year Treasury bond yields drop for the second consecutive day to around 3.72% and 4.56% in that order.

Looking forward, USD/CNH traders should pay attention to today’s US Consumer Price Index (CPI) figures for May as the Fed decision looms on Wednesday. It’s worth noting that the market forecasts of witnessing no change in the Core CPI MoM figure of 0.4% gain major attention as softer figures could push back the July rate hike concerns and may not allow the Fed to sound hawkish