The expectation of an eventual reopening in the second-largest economy in the world. Which had earlier sparked a wide surge in riskier assets, was dashed after China indicated it is sticking itself with severe COVID restrictions.
Even though the COVID-19 outbreak has been going on for nearly three years.
China indicated over the weekend that it would continue to use a “dynamic-clearing” policy to deal with cases as soon as they arise.
The Australian dollar last decreased by 0.7% to $0.6426, while the New Zealand dollar decreased by 0.6% to $0.5893.
The trade data released on Monday. Which revealed that exports and imports unexpectedly dropped in October—the first simultaneous decline since May 2020—highlighted the economic effects of China’s
The euro fell 0.1% to $0.9949, wiping out some of its approximately 2% increase from Friday. While sterling moved down 0.3% to $1.1340.
Carol Kong, a currency strategist at Commonwealth Bank of Australia
, “Any rise in the Aussie, as well as the other currencies, would probably prove short-lived, since China is still highly dedicated to its response to the COVID outbreaks” (CBA).
Investors were also analysing Friday’s
US jobs report.
Which revealed that businesses added more positions than forecast (261,000) in October and that hourly wages increased, indicating a persistently tight labour market.
Overall, the assessment was “quite mixed,” according to
Kong of CBA
. According to the market’s response, investors were quite concerned by the increase in the unemployment rate. Which may have caused participants to lower their expectations for the Fed funds rate.
four Federal Reserve members
said they would still take into account a modest interest rate increase during their next meeting carried.
With Thursday’s US inflation data serving as the next important data point.
futures currently indicate that markets were price in a 69% probability of a 50 bps rate increase at the Fed’s December meeting.