CNY

Risk-sensitive currencies are moving higher and the dollar is under pressure as traders position for a more stable – and less divergent – Federal Reserve in 2023. With growth gaps narrowing and the US tightening cycle reaching its logical conclusion as other central banks catch up, bets against American exceptionalism are growing in scale in the run-up to year end. Beijing’s crackdown on protesters continued overnight, with security officials pledging to take action against “hostile forces” threatening the state – but health authorities said they would ramp up vaccination of older citizens, addressing a significant hurdle to reopening the economy....

With protests losing steam and Chinese authorities making comforting noises about a relaxation in “zero-covid” policies, yesterday’s flight to safety is beginning to unwind. Treasury yields are softening and the dollar is down as investors tiptoe back into risk assets. Commodities are staging a solid rebound, the Canadian dollar is ticking higher, and the Antipodean units are recovering in a snappish manner. Markets think China’s social unrest has made an immediate reversal in official policy less likely – authorities are loath to acknowledge signs of dissent – but will serve to accelerate the government’s vaccination efforts for the elderly population,...