China could retaliate by threatening to back out from the US-China trade deal which is in its final stage. AUD/JPY could slide lower.
- US President Donald Trump signed a bill that supports anti-government protestors in Hong Kong.
- The first bill requires annual reviews of Hong Kong’s special trade status under American law, as well as sanctions against any officials deemed responsible for human rights abuses or undermining the city’s autonomy.
- The second bill bans the export of crowd-control items such as tear gas and rubber bullets to the city’s police.
- China’s foreign ministry said it resolutely opposes the law and threatened to take firm countermeasures, complicating efforts to scale back a 16-month-long trade war between the world's two largest economies.
- Safe haven currencies like gold rose slightly by 0.22% to the $1,457 price level.
- Trump had no choice but to sign the bill after the House cleared 417-1 after Senate passed it without opposition.
- However, do not expect strong risk-off currencies dominating as China may still sign the “phase one” deal nonetheless.
- AUD/JPY rejected off its resistance and could head lower towards 72.90 as uncertainties could pressure risk-on currencies.
Fullerton Markets Research Team
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