China's central bank set the yuan midpoint rate at 6.7628 per US dollar on September 16, marking an upward adjustment of 42 basis points and pushing the currency to its strongest official fixing since February 3, 2023. This move reflects growing market confidence in the Chinese currency amid shifting expectations for US monetary policy.

According to the CME Group's FedWatch tool, there is now a 92.4% probability that the US Federal Reserve will raise interest rates by 25 basis points at its upcoming September meeting, with only a 7.6% chance of holding rates steady. Market participants are closely monitoring the Fed's policy trajectory as inflation data continues to shape the outlook.

Looking further ahead, the probability of a 25-basis-point hike by October stands at 52%, while there is a 44% chance of a cumulative 50-basis-point increase, compared with a 4% likelihood of no change. These expectations are driving dollar dynamics and, consequently, influencing the yuan's valuation against the greenback in global markets.