Market Analytics and Technical Considerations
Key Points
On Tuesday, the focus remained squarely on COVID-related protests in China and the government’s response, despite hawkish signals from the Federal Reserve. The majority of Asian currencies recovered sharply from recent losses.
The Yuan rose 0.4% to 7.1792 against the dollar, recuperating from an almost three-week low hit in the earlier meeting, while the yuan hopped 0.8%.
After escalating over the weekend, civil protests against the government’s strict zero-COVID policies appeared to have subsided. Worries over additional monetary disturbances from the fights caused profound decreases in business sectors on Monday, despite the fact that markets balanced out from their misfortunes later in the meeting.
Some analysts suggested that the protests might also force the government to eventually reduce its zero-COVID policy, which would be beneficial to Chinese and other Asian markets in general. However, it appears unlikely that the country will experience a reversal of the zero-COVID status in the near future given the country’s ongoing record-high daily infection rate.
In addition, Beijing implemented additional stimulus measures aimed at the real estate industry, bolstering national sentiment and local stock markets.
A recovery in Chinese markets was reflected in broader Asian currencies, which brushed aside hawkish remarks made by two Federal Reserve officials that suggested that U.S. interest rates will remain high well into 2022.The South Korean won led gains across Asia with a rise of 1.2%, while the Singapore dollar gained 0.4 percent.
Tuesday saw a 0.4% decline in the DXY and dollar futures, but they remained above the 106 level, maintaining some gains from the previous session as demand for safe havens increased due to concerns about China.
However, a growing number of market participants are betting against the dollar on the idea that inflation in the United States has reached its peak, necessitating a lower Fed rate increase.
Taken care of individuals have flagged that future rate activity will generally rely upon expansion, which is presently moving great over the Federal Reserve’s 2% yearly objective. This week, payroll data on Friday and an address by Fed Chair Jerome Powell are the main topics.
Even though retail sales data for October missed market expectations, the yen gained 0.2 percent, putting more pressure on the world’s third-largest economy. In recent weeks, the currency has benefited from expectations of a dovish Fed.
The Australian Dollar (AUD) gained 0.8%, while the New Zealand Dollar (NZD) gained 0.7%.
