Four-month high daily infections push Tokyo towards second-highest COVID-19 alert level

Japan’s worsening coronavirus conditions push policymakers towards the reintroduction of harsh activity controls. The Asian major reported the highest daily COVID-19 cases in four months on Wednesday, per Kyodo news, which in turn hints at the return of the second-higher coronavirus alert level in Tokyo.

“The nationwide tally stood at 13,244, with Tokyo accounting for 2,198 of the cases and marking the first time in over four months that the count has surpassed 2,000,” said Kyodo News.

Following that, NHK came out with the update saying, “Tokyo to raise covid-19 alert to second-highest level.”

It’s worth noting that Okinawa, Hiroshima and Yamaguchi prefectures have already entered a quasi-state of emergency from Sunday.

FX implications

Given the faster pace of the virus spread, coupled with the hawkish Fedspeak and multi-month high US inflation, the US Treasury yields should regain the upside momentum and weigh on the risk barometers like AUD/USD while also likely to fuel USD/JPY prices. However, the immediate reaction to the news seems moderate.

Read: AUD/USD battles 100-DMA on the way to 0.7300 amid broad USD weakness