News from China helps risky assets

We saw earlier this morning that while the Chinese government is sticking to its zero-Covid policy, some of the measures have been relaxed as a result of the protests in China. Lockdowns to suppress the spread of the virus should be lifted “as quickly as possible” following outbreaks, said health officials at a National Health Commission press briefing in Beijing on Tuesday, as they defended the country’s overall policy direction – which aims to stamp out the spread of the virus through hefty controls. This induced a little bit of risk-on momentum in the market, and we did see the equity market, as well as the EM currencies, on the front foot earlier this morning. The rand touched a low of R 16.9400 but has since retreated back to R17.0200 against the US dollar. We have seen the US dollar flexing its muscle in late afternoon trading, with the Euro and Pound losing the most ground.  It is noteworthy that the Rand has not reacted to the dollar move, but should it continue, we could see pressure on the Rand. 

Fed Speakers and Non-Farm are important

Last night we did see some Fed speakers talking about the direction of the Fed in relation to interest hikes, and all of them reiterated the fact that the Fed should keep hiking. This makes Friday's number important as a significant drop in the job numbers could force the hand of the Fed to relook at its policy. Expect some fireworks on Friday after the release of the number. 

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