China continues to ease restrictions.

China has continued to ease coronavirus restrictions with an effective and rapid move away from the zero-covid policy, although officials are denying that the overall policy has been abandoned.

Although markets have been looking ahead to such a move, overall confidence in the global economy has tended to deteriorate.

Wall Street equities edged lower on Wednesday with underlying concerns over potential recession conditions in the US economy and vulnerability in the global economy.

US Treasuries posted further gains during Wednesday and secured further support in Asa on Thursday with the 10-year yield declining to a 10-week low below the 3.50%.

The dollar overall was unable to make further gains on Wednesday with lower yields sapping support an tending to offset potential support from concerns over the global economy.

The Bank of Canada increased interest rates by 50 basis points to 4.25% at the latest policy meeting. The consensus was for a 50 basis-point hike, although a sizeable minority expected a 25 basis-point move.

The bank remains concerned over inflation, but expects the economy will stall and it suggested that further rate hikes may not be necessary, although a full assessment will be made in January.

The Euro secured initial support from better than expected German and Euro-Zone data. EUR/USD advanced to highs near 1.0550. The dollar recovered some ground as equities moved lower.

Lower oil prices helped cushion the Euro with EUR/USD support just below 1.0500. US yields moved lower after the US open as recession fears underpinned Treasuries.

The yen recovered ground after the New York open. From highs just above 137.80, USD/JPY dipped sharply to below 136.50. USD/JPY recovered to near 137.00 on Thursday before fading again.

The Swiss franc was unable to gain significant support. EUR/CHF challenged 0.9900 before trading just below this level with USD/CHF just above 0.9400.

Sterling was notably resilient despite a lack of confidence in domestic fundamentals. GBP/USD found support above 1.2100 and rallied above 1.2200 before trading just below this level on Thursday.

The Australian dollar posted net gains as the US currency lost ground with AUD/USD gains to 0.6735 before drifting marginally lower in Asia. The Canadian dollar jumped after the Bank of Canada policy decision, but failed to hold gains amid speculation that rates have peaked. USD/CAD found support just below 1.3600 before a rebound to 1.3670 on Thursday. Lower oil prices sapped Norwegian krone support with EUR/NOK above 10.50.

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.