Fresh Aussie-China tussle, US infrastructure spending bill talks and covid woes can weigh on sentiment

Although global markets cheered the Bank of Canada’s (BOC) tapering, the risk-on mood gets multiple hurdles, most of them were already playing the background music.

Among them, Global Times (GT) signals that China will take further punitive measures against Australia, over its dumping of Beijing’s “Belt and Road” initiative, which comes up the first in Asia.

Following that, the Huffington Post comes out with the headlines suggesting US infrastructure talks mired in gridlock over scope, taxes. The news highlights differences among lawmakers over what counts as infrastructure and how to pay for it as the main cause of concern. “A group of Republicans, led by Sen. Shelley Moore Capito of West Virginia, is expected to unveil a $500-800 billion infrastructure proposal this week. But that topline number would represent a fraction of Biden’s broader $2-3 trillion infrastructure and jobs plan, which includes things like elder and child care, as well as affordable housing and school funding,” the report added.

Elsewhere, the UK’s Daily Express cheered zero fresh covid cases at the testing for a big event. Also on the positive side were early updates from the Johnson & Johnson’s single-shot COVID-19 vaccine phase 3 data signaling optimism over Friday’s decision over its usage by the US Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA).

However, India, unfortunately, refreshes the record new infection level above 300K and pours cold water on expectedly upbeat sentiment. Furthermore, chatters over the requirement of third vaccine shots to gain the immunity over the covid also weigh on the sentiment. "Dr. Ozlem Tureci, co-founder and CMO of BioNTech, which developed a Covid vaccine with Pfizer, said she also expects people will need to get vaccinated against the coronavirus annually, like for the seasonal flu. That’s because, she said, scientists expect vaccine-induced immunity against the virus will decrease over time," said the CNBC.

FX implications

It should, however, be noted that the challenges to the risk-on mood are yet to play their roles and the Wall Street benchmarks rose for the first time in the last three days by the end of Wednesday’s trading, mainly led by the BOC event.

Read: AUD/USD: Bulls seek extra push to stay around mid-0.7700s