Change Of Mood On China Covid Matters Undermines Sentiment

Risk aversion took hold in early Asia-Pacific dealing as Chinese health officials brushed away earlier press reports flagging potential for the relaxation of the nation's strict COVID Zero policies. The National Health Commission said that virus containment measures taken to date "are completely correct," pouring cold water on enthusiasm about the prospect of earlier re-opening.

• Source reports surrounding alleged U.S. backdoor efforts to put Ukraine/Russia peace talks back on the table may have restrained risk-off flows to some degree, although Kyiv has not yet signalled readiness to abandon its view that it is impossible to negotiate with the current Russian administration in good faith.
• The Antipodeans have retreated, leading high-beta FX lower, as both WTI and Brent futures have shed 1.5% and 1.2% respectively. AUD/NZD has see-sawed, having a look above Friday's high in the process, but last trades virtually unchanged.
• Safe havens are in demand, with the greenback sitting atop the G10 pile as U.S. Tsy curve twist flattens. USD/JPY has added ~40 pips so far, chewing into last Friday's losses, and is testing the Y147.00 mark as we type.
• Offshore yuan has weakened, with spot USD/CNH last 0.55% higher, as we await the PBOC fixing.
• Regional calendar is fairly limited, with China's monthly trade data expected to cross the wires at an unspecified time today. After hours, focus will turn to German & Norwegian industrial output figures, as well as comments from Fed's Collins & Barkin, ECB's Lagarde & Panetta.