Chinese central bank announced a 25 basis-point reduction in the bank reserve ratio requirement.

After Friday’s European open, the Chinese central bank announced a 25 basis-point reduction in the bank reserve ratio requirement in an attempt to underpin liquidity. The move helped underpin global risk appetite, although the overall response was limited.

There has, however, been a notable increase in political protests within China amid a series of protests in Shanghai and Bejing against Coronavirus policies, mass testing and lockdowns.

Very unusually, there was also criticism of the leadership and evidence of calls for President Xi to step down.

There will be concerns over the threat of a crackdown by the authorities.

Risk appetite deteriorated on Monday amid concerns over protests in China. Equity markets moved lower, although moves were limited at this stage.

Oil prices dipped sharply on Friday and China concerns were a significant element in triggering further losses on Monday with benchmark crude prices sliding to 2022 lows

Lower oil prices will help ease market concerns over global inflation developments.

Fed Char Powell is due to speak on Wednesday which will be important for policy expectations and the latest US employment report is due on Friday.

Expectations of a slower pace of ECB rate hikes curbed Euro support on Friday. The dollar edged higher in tandem with bond yields, but retreated again later in the session. Trading conditions were lacklustre after Thursday’s Thanksgiving holiday. EUR/USD dipped to lows near 1.0350 before a recovery to 1.0400. Weaker risk conditions pushed the Euro lower again on Monday. EUR/USD did, however, find support below 1.0350 as lower oil prices underpinned the Euro.

The dollar also failed to hold intra-day highs against the yen on Friday. USD/JPY hit highs at 139.60 before a retreat to near 139.00. Weaker risk conditions underpinned the yen on Monday. USD/JPY dipped to 10-day lows below 138.00 with EUR/JPY lows near 143.00.

The Swiss franc edged lower on Friday, but regained some ground on Monday as risk conditions weakened. EUR/CHF edged below 0.9800 with USD/CHF at 0.9450 from 0.9500 highs on Friday.

Sterling was vulnerable to a correction after solid weekly gains Weaker risk conditions also hampered the currency on Monday, but overall sentiment held steady. GBP/USD dipped to below 1.2050 before a tentative recovery.

Commodity currencies rallied from intra-day lows, but still posted net losses on a firm US dollar. There were further losses on Monday amid weaker risk conditions. AUD/USD settled just below 0.6750 on Friday with losses to 0.6680 on Monday. USD/CAD advanced to 1.3380 with further gains to near 1.3450 on Monday as oil prices posted further losses.