After Chinese authorities promised to stick to their strict Covid-zero stance, the Australian dollar slumped early Monday as traders sought haven assets.
The Aussie fell as much as 1.1% to 64.02 US cents, with Kiwi trailing close behind, to lead major currencies like the euro and pound lower. The dollar went up against its Group of 10 peers as traders sought haven assets.
Jason Wong, a currency strategist at Bank of New Zealand said it tells us how sensitive the market is to the end of China's zero-Covid policy. Some in the market want to believe that China will relent and it is likely to be a gradual process because of the view, where there is smoke there is fire. The Aussie surged 2.9% on Friday, its biggest gain in 11 years, amid hopes that China is about to end its Covid-zero policy. At the weekend, health authorities pledged to stick to the plan, but that was snuffed out at the weekend.
An unverified post last week, and a report that authorities were working on plans to scrap a system that penalizes airlines for bringing virus cases into the country, boosted investor hopes that China's pandemic policy may be loosened.