Yuan falls and dollar rises amid China’s protests against COVID restrictions

According to Reuters, protests against restrictive policies related to COVID-19 have erupted across China. This social unrest has increased uncertainty in the market, leading to the yuan’s fall. The U.S. dollar, in turn, significantly strengthened over the weekend, as some investors consider it a safer and more reliable currency. 

Rodrigo Catril, currency strategist at National Australia Bank, described these ongoing protests as a new level of concern in China, which requires special attention. Also, these events will undoubtedly create a certain sentiment in the market at the beginning of the week.

In fact, China's protests have already affected the U.S. dollar and paused its decline that has lasted for a few weeks. The fall of the American currency was driven by investors’ hope that the Federal Reserve (Fed) will slow down the pace of rate hikes in the country.

On Wednesday, Fed Chair Jerome Powell will present the report on the U.S. economy’s prospects at a Brookings Institution event, which might shed some light on the following course of the country’s monetary policy.