China Strengthens Yuan Fix as Dollar Weakens Amid Fed Rate Cut Speculation

The People's Bank of China set its firmest yuan fix since November at 7.1161 per dollar, capitalizing on a broad greenback retreat after Fed Chair Powell hinted at potential rate cuts. The Dollar Spot Index dropped 0.8% following his remarks about labor market strain, despite persistent inflation.

While the onshore yuan edged up to 7.1605 - its strongest since July - Bloomberg's basket index showed the currency losing ground against major peers. The fixing below 7.12 for the first time in eight months signals Beijing's aggressive response to maintain stability amid global currency pressures.

Simultaneously, the PBOC unleashed its largest liquidity injection since January, deploying 600 billion yuan ($84 billion) through mixed-term lending facilities. This comes as China's bond markets show stress, with yields spiking in recent 30-year government debt auctions.