Forex Today: China Reaffirms Zero Covid Policy, Knocking Commodities

After speculation that China was on the brink of abandoning its zero Covid policy, China announces the policy will be maintained, sending expectations for the Chinese economy and demand lower.

  1. Following speculation that the Chinese government was about to announce a softening of its zero Covid policy, which was boosting stocks and commodities on expectation of increased Chinese demand, the Chinese government has announced it will maintain the policy. This has caused a small drop in commodities (notably WTI Crude Oil) and the commodity currencies, especially those linked most closely to the Chinese economy (the Australian and New Zealand Dollars).
  2. In the Forex market, the day has begun as a typically quiet Monday, with little relative price movement. The US Dollar has strengthened a little, while the commodity currencies (CAD, AUD, NZD) are currently weak, although all the G-10 currencies have lost ground so far today against the US Dollar.
  3. Last Friday saw releases of very strong US and Canadian employment data, with US non-farm payrolls expanding by 261k when only 197k had been expected. US average earnings increased by 0.4% over the past month, higher than the 0.3% which had been expected, hinting at continuing inflationary wage pressures.
  4. Daily new global coronavirus cases dropped last week, continuing a downwards trend which begun last July.
  5. It is estimated that 68.2% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 8.1% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  6. Total confirmed new coronavirus cases worldwide stand at over 637.7 million with an average case fatality rate of 1.04%.  
  7. The rate of new coronavirus infections appears to now be significantly increasing only in Japan.  
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.