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On September 1st, Royal Canadian Securities analyst Abbas Keshwani commented that given the yens weakness, the Bank of Japan (BOJ) may raise interest rates or intervene in the foreign exchange market in the coming weeks. The yen has weakened over the past month, and recent depreciation has already offset much of the BOJs intervention efforts over the past few months. Keshwani stated that for the yen to appreciate significantly, the BOJ would need to adopt an aggressive rate hike cycle, but it is unlikely to do so at the expense of economic growth. He added, "The BOJ may raise interest rates to a level sufficient to prevent the yen from weakening excessively until the Japanese government bond market stabilizes next year, thus creating conditions for a yen recovery."On September 1st, BCA Research analyst Felix Wezina-Poirier stated in a report that volatility in government bond yields is expected to be a significant factor influencing risk asset prices. Sovereign bond yields have risen to multi-year highs due to inflation concerns triggered by high oil prices. Wezina-Poirier stated, "For equities, the absolute level of yields is less important than the speed of change; therefore, implied interest rate volatility is a more useful indicator for measuring equity market risk." However, Federal Reserve Chairman Warshs remarks last week signaled a readiness to take action to curb inflation, which should help keep yield volatility at a relatively controlled level.September 1st news: Voyah Automobile delivered 13,003 vehicles in August 2026, and a total of 102,456 vehicles from January to August 2026, representing a year-on-year increase of 25%.Micron Technology (MU.O) shares fell 1.5% in pre-market trading.Both WTI and Brent crude oil rose by $0.60 in the short term, currently trading at $86.28 per barrel and $91.44 per barrel respectively.

NZD/USD finds support near 0.6220; a decline appears more probable due to China's Covid concerns

Alina Haynes

Nov 28, 2022 15:04

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China's anti-Covid shutdown protests have weakened commodity-linked currencies, resulting in a gap-down start of roughly 0.6220 for the NZD/USD pair. During the previous week, the New Zealand dollar dropped after failing to surpass the round-level barrier of 0.6300.

 

Individuals have taken to the streets in China to demonstrate their opposition against the zero-tolerance policy, leading to a rise in civil unrest. Due to Chinese leader Xi Jinping's conservative posture and authoritarian framework, global markets have become more risk-averse. This has created an economic expansion risk and may worsen the already shaky housing market. Increasing apprehensions about societal risks may also result in political instability, which may have long-lasting detrimental effects on economic structure.

 

Notably, New Zealand is one of China's most important trading partners, and instability in China could damage the New Zealand Dollar.

 

In the meantime, the US Dollar Index (DXY) is profiting from investors' liquidity as the demand for safe-haven assets surges. The USD Index is hovering around 106.20 and attempting to reduce volatility as China's anti-locking protests restrict the upside and predictions of a slowdown in the Federal Reserve's larger rate hike cycle limit the downside (Fed).

 

S&P500 futures are under heavy pressure from market players due to a risk-averse market mentality. In anticipation of Fed chief Jerome Powell's address on Wednesday, yields on 10-year US Treasuries have decreased to approximately 3.68 percent. The Fed Chair's speech could dispel suspicions about a pause to the Fed's current rate-hiking program.