AUD/USD, a liquid proxy for risk, retreated over 0.7% on Monday, as market sentiment was roiled by protests in China against the government’s zero-COVID policy, which underpinned the safe-haven US Dollar.
Following an apartment fire that led to the death of 10 people in Urumqi, the capital of China’s Xinjiang Uyghur Autonomous Region, hundreds of demonstrators clashed with the police in Shanghai on Sunday night, with protests over Beijing’s strict COVID-19 restrictions continued for a third day.
The wave of civil unrest, especially at a time when COVID-19 infections in the country are on the rise, kept market players on edge.
“We’re really looking at the government response to what’s happening … the government response is so unpredictable, and of course that just means derisking,” Chris Weston, head of research at Australian brokerage Pepperstone, said.
Last Friday the People’s Bank of China announced plans to reduce the reserve requirement ratio (RRR) for banks by 25 basis points from December 5th.
“If the RRR cut is the only monetary policy tool that the PBOC is going to implement, it may not lead to a significant increase in bank lending,” Iris Pang, chief economist for Greater China at ING, was quoted as saying by Reuters.
“Companies are currently facing weaker retail sales from a higher number of COVID cases and falling home prices from unfinished home projects.”
Meanwhile, Federal Reserve Chair Jerome Powell is scheduled to speak on the US economic outlook and the labor market on Wednesday, while investors will be looking for hints regarding Fed’s monetary policy course.
As of 9:36 GMT on Monday AUD/USD was losing 0.72% to trade at 0.6702. During the early phase of the Asian trading session, the major Forex pair went down as low as 0.6665, which has been its weakest level since November 23rd (0.6634).
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 0.6751
R1 – 0.6781
R2 – 0.6811
R3 – 0.6841
R4 – 0.6871
S1 – 0.6721
S2 – 0.6691
S3 – 0.6660
S4 – 0.6630
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
