FX News

FX Update: Protests spread across China disrupt currencies

Market Overview

Key Points:

• Covid lockdown protests across China created “risk off” flows early in the week as the unrest continues
• ECB’s Knot has been on the wires suggesting a Eurozone recession is not a foregone conclusion
• Crude Oil drops to 74.00 down 3% on the day, China headlines the catalyst
• RBNZ’s Silk says a NZ recession will be “shallow and technical” with spending data and CPI to determine their next move when they meet on February 22nd
• The Central Bank of China (PBOC) cut their RRR – reserve requirement ratio by 25 basis points taking effect from 5th December. This is the cash banks need to keep in reserve and should stimulate the economy
• The British Pound (GBP) was the strongest currency last week while the Australian Dollar (AUD) was the worst performer.

Major Announcements last week:

• Canadian Core Retail Sales -0.7% vs -0.6%

• Reserve Bank of New Zealand hikes interest rates from 3.5% to 4.25%

• US New Home Sales 632k better than the 570k expected

• UK Manufacturing 46.2 vs 45.7, well below what’s considered expansive

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