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USD Rebounds Early, As China States It Will Adhere To Covid Zero Policy


The USD has regained some ground in the early part of trading to start this week. The dollar is stronger across the board, as the China health authorities stated on Saturday, they will adhere to current Covid zero policies. The National Health Commission (NHC) stated “Previous practices have proved that our prevention and control plans and a series of strategic measures are completely correct,” (see this link for more details).

  • This is taking away some of the impetus from last week's late USD sell-off/China related asset rebound, which was partly fuelled on hopes/speculation of a shift in the Covid-zero policy.
  • The AUD/USD is off around 1%, back to the low 0.6400 region, after closing at 0.6470 in NY on Friday (up near 3% for Friday session). NZD/USD is off by around the same amount, last around the 0.5870 region.
  • EUR/USD is back to 0.9910, around 0.50% below closing levels from the end of last week. GBP/USD - 0.50% to 1.1315/20.
  • Note though liquidity is still light for this part of the session.
  • It's also unlikely to be an end to speculation as to when policies can shift from a covid-zero standpoint, which could remain a source of volatility for China sensitive assets.

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