Asia Wrap: Traders Don’t Expect A Full Snap Reopening In China

2022.11.01 07:19

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Markets

Asian stocks advanced as technology shares led a rebound in China’s equity market ahead of a much-anticipated policy by the US Federal Reserve. Index jumped as much as 1.4%, set for its biggest gain in almost a week, as dip buyers helped lift China’s gauges from multi-year lows.

China reopening chatter is quite broad and highly encouraging, although looking at price action, traders are discounting a full snap reopening. The consensus among the street has been that any change before year-end would become apparent in the first couple of weeks following the party congress.

Ahead of speculation today, the overwhelming consensus for a reopening was Q2 2023 (unclear whether that has moved materially). But if we get a political nod to ease out of COVID -zero in Q1 2023, that would be sufficiently positive to drive a substantial global “risk-on” move.

FOREX

The FOMC meeting tomorrow could be decisive since the markets have revolved around a FED pivot the last couple of weeks. So, the million-dollar question for FX traders is, will the Fed push back on market pricing? Or will they acknowledge and potentially sign a slowing in hikes?

With all the pivot noise, it feels like a make-or-break situation for the and critical for the Greenback’s path going into year-end. But at the end of the day, with a tight labor market and still hot, why would the Fed pivot?

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