Stocks down. Bond yields down. Dollar and yen up. It's a classic risk-off and haven demand move in markets so far today.
China protests over the weekend is the main story and that is going to be a challenge for Beijing to handle. Such a situation is rare for the country but amid its prolonged zero-Covid policy and reinstatement of lockdown measures, the public frustration is understandable. The "easy way out" would be to change course and heed the people's wishes but the main obstacle is that Xi has staked a lot of his own authority on the whole zero-Covid policy approach. Backing down from that now would come at a political cost and will be a blow to Xi's pride and ego.
As such, the lack of certainty for what might happen next is putting markets at an unease.
The yen is the lead gainer with USD/JPY pinned down closer to 138.00 on the day as highlighted earlier here, with the fall in Treasury yields on haven demand driving the move.
The dollar is also seen firmer across the board with AUD/USD down 0.9% to 0.6680 levels and retreating back towards its 100-day moving average (red line). That comes after a semblance of a double-top at the 61.8 Fib retracement level at 0.6767:
Meanwhile, EUR/USD is seen contesting its 200-day moving average (blue line) again as buyers continue to try and keep price above that, currently at 1.0382, in order to maintain the recent upside momentum:
