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- Local officials detail what is required to release the Xi’an lockdown. Xi’an has reached its 13th day of confinement.
- When new confirmed cases were either isolated “close contacts” or “close contacts of close contacts” of previously documented cases, with no additional transmission in the community, this is referred to as “zero social transmission.” Only after that would officials gradually ease restrictions on the city’s nearly 13 million residents. Today is also the sixth round of mass testing for city residents since December 21.
- China has announced a total lockdown on Yuzhou, a city with a population of over one million people, after three local symptomatic cases were discovered in the last two days.
- As has been said several times in the run-up to the new year, omicron may not represent a significant risk internationally, but China is the key concern. And what concerns China frequently impacts the rest of the globe as well.
- Is the USD/JPY breakout about to gain traction? That is likely the most important chart in the major currency area right now. Flows are beginning to return to the market, and the early indications appear to be centred on the Fed’s forecast. If nothing else, this will place a greater emphasis on the FOMC minutes and the publication of the NFP this week. For the time being, bond dealers are attempting to make sense of it all, with rates rising as a result of yesterday’s selloff. It will be interesting to watch how this affects the technical picture in 10-year yields. Which is the most important issue to keep an eye on in the next sessions.
- In the meanwhile, equities are still doing their own thing, but it will be difficult to ignore overall market mood if there is some larger emphasis at work. In any event, it’s still early, so we’ll see how things progress.
- Elsewhere, despite gold’s favourable seasonals in January, the gold breakout turned out to be a sham. However, for the time being, the price is staying over $1,800, providing some solace to purchasers. Aside from that, oil was turbulent yesterday but rebounded late, with a bounce off its 100-day moving average. Any significant upside, i.e. anything beyond $80, remains difficult, and that OPEC+ today is unlikely to have much of an influence.
USD/JPY begins 2022 where it left off in 2021.
USD/JPY is tracking just shy of 115.80 Governor Kuroda of the Bank of Japan spoke earlier, but his words had little influence.
The BOJ has shown no signs of tapering or tightening policy. The yen has been weak in the second half of 2021, and it is expected to be weak again today on the first Japan session of the new year (Japan was on holiday yesterday).
With the effect of Omicron currently considered as less severe than it could have been and demand for growth assets increasing, the attraction of ‘safe haven’ assets such as the yen has decreased.