Zero Covid policy in China will end soon?

Monday was a correction day on stocks, largely anticipated and quite significant as on many major indices, we managed to retrace all the gains from the previous week. It does not change the overall positive sentiment but of course, may be a start of a larger correction in the mid-term. Indices were so overbought that it was almost impossible for them to continue this winning streak for longer.

Monday brought us a strong decline on Oil, where the price managed to get closer to the yearly lows set in January. But that was in the first half of the European session as later, buyers managed to pull the price higher, giving hope to Oil exporting countries. The reason for that may be very interesting. There are currently rumors on the market, that China may end the zero Covid policy and it will be soon announced. That rumor is helping Chinese indices and commodities. Hang Seng is currently up 4% and Shanghai Composite Index is rising more than 2%.

On the forex market, we had a significant move on the EURUSD, which in the first half of the day rose sharply and established new, mid-term highs, to give everything back in the second half of the day. This sharp reversal managed to create the shooting star candle on the chart, which is a pretty negative sign and promotes the weakness of the common European currency in the forthcoming days.

“Chinese rumor” is also helping commodities currencies like Canadian and Australian Dollars. AUD index is up almost 0.8% and the CAD index is climbing  0.3% higher. The Canadian Dollar will be influenced today by the GDP data from Canada, which will be published later in the day. Expectations are on the 0.1%, which was also the print from the previous month.

We will have two more Tier-1 data on the calendar today. The first one is the speech from BoE Bailey, crucial for the Sterling and the CB Consumer Confidence influential for the American Dollar.