China"s yuan firmed on Wednesday after the central bank left a key lending rate unchanged, while new data showed factory output grew faster than expected, but traders and analysts expect further gains in the currency to be limited. Traders said that moves would also be muted as global markets await the U.S. Federal Reserve policy meeting outcome. "There"s not likely to be much going on today, the yuan can"t move. The market is expecting a quicker taper from the Fed, which will push the dollar index up, but the yuan is still the same," said a trader at a foreign bank. Before the market open, the PBOC set the yuan"s daily midpoint at 6.3716 per dollar, its weakest in just over a week. Spot yuan opened at 6.3660 per dollar and firmed to 6.3644 by midday, 26 pips stronger than Tuesday"s late session close. The offshore yuan strengthened to 6.3705 per dollar from a close of 6.3736. The Chinese unit even set a new milestone against a trade-weighted basket of currencies (.CFSCNYI), rising to its strongest level since November 2015. A slight firming in spot yuan came after the People"s Bank of China (PBOC) on Wednesday injected 500 billion yuan into the financial system through its medium-term lending facility (MLF), partly rolling over maturing loans but leaving the interest rate unchanged. read more The MLF injection came alongside the implementation of a previously announced cut to banks" reserve requirement ratio (RRR), which freed up 1.2 trillion yuan worth of long-term funds. The RRR cut reflects a gradual shift by policymakers in Beijing, spurred on by worries over weakening economic growth, toward policy easing. New data on Wednesday further illustrated the mixed economic picture as factory output grew faster than expected in November, while retailers suffered from new curbs to fight rising COVID-19 cases and investment growth slowed. read more But Ken Cheung, chief Asian FX strategist at Mizuho Bank, said the decision not to lower the MLF rate, which went against some market expectations of a cut to the benchmark loan prime rate this month, suggested that easing signals had receded. "There does not exist a clear relationship between RRR cut and rate cut," he said, noting the lack of an MLF rate cut had pushed up yuan forward points as investors reconsidered expectations of policy divergence between the U.S. and China. The yuan market at 4:03AM GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.3716 6.3675 -0.06% Spot yuan 6.3644 6.367 0.04% Divergence from midpoint* -0.11% Spot change YTD 2.58% Spot change since 2005 revaluation 30.04% Key indexes: Item Current Previous Change Thomson Reuters/HKEX CNH index 102.4 102.32 0.1 Dollar index 96.535 96.562 0.0 *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People"s Bank of China (PBOC) allows the exchange rate to rise or fall 2% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan * 6.3705 -0.10% Offshore non-deliverable forwards ** 6.5377 -2.54% *Premium for offshore spot over onshore **Figure reflects difference from PBOC"s official midpoint, since non-deliverable forwards are settled against the midpoint. . Reporting by Andrew Galbraith and Jindong Zhang; Editing by Sam Holmes Our Standards: The Thomson Reuters Trust Principles.