SHANGHAI: China’s yuan held steady against the US dollar on Wednesday, as traders returned to work after the Mid-Autumn Festival break and ahead of the Federal Reserve’s key rate decision.

The Federal Open Market Committee (FOMC) meeting, which concludes later on Wednesday, is expected to kick off a US easing cycle that could spark volatility in currency pairs, including dollar-yuan. The chances of a super-sized cut of 50 basis points (bps) retreated to 65% in the morning session in Asia, according to LSEG data, after US retail sales unexpectedly rose in August.

Prior to the market’s opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.0870 per dollar, its strongest since Jan. 2 and 42 pips weaker than a Reuters’ estimate.

The spot yuan opened at 7.0968 per dollar and was last trading 14 pips lower than the previous late session close at 7.0972 as of 0250 GMT and 0.14% weaker than the midpoint.