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China COVID Concerns Trigger Renewed Risk-Off Wave

FOREX
  • The greenback has resumed its incline Monday, rising against all others in G10, although Friday's highs remain out of reach for now. A break above 107.786 for the USD Index puts the dollar at its strongest levels since 2002.
  • Stock futures globally are lower, with US markets indicating a negative open on Wall Street later today. The renewed wave of risk-off has been triggered by a surge in COVID-19 cases found in Shanghai, with a new subvariant detected and raising concerns of fresh lockdown pressures across China.
  • The dollar strength keeps EUR/USD within range of the key psychological parity level which, if broken, puts the pair below 1.0000 for the first time in two decades.
  • Soft commodities prices are adding to the risk-off pressure, with industrial metals from steel rebar to iron ore offered after weakness in local Chinese markets. Lower oil markets are working against commodity-tied currencies, putting NOK at the bottom of the G10 table ahead of the NY crossover.
  • There are no notable data releases due Monday, with focus remaining on the central bank speaker slate. ECB's de Cos and Nagel speak as well as BoE's Bailey and Fed's Williams.

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