If Trump were to sign the Hong Kong Human Rights and Democracy Act, this could worsen the US-China trade talks. AUD/JPY could fall lower.
- The US Senate unanimously approved a measure aiming to protect human beings in Hong Kong amid efforts to crack down on months of anti-government protests
- A second bill aimed at baring the export of certain ammunitions to Hong Kong police was passed as well
- Chinese State Councillor and Foreign Minister Wang Yi told former US Defense Secretary William Cohen during a meeting in Beijing that Beijing resolutely opposes the passing of the pro-Hong Kong rights bill
- He mentioned that they will not allow anyone to undermine the “one country, two systems” principle and vow “forceful measures” if Trump signs the bill
- The bill comes at a tricky time and Trump needs the US-China trade victory to get votes for his 2020 campaign
- Meanwhile, the “phase-one” deal is in peril and the ball is now in Trump’s court. If he signs the deal, we will have to see the retaliatory move from China whether to follow on with the deal
- This increases the uncertainty in the market as a US-China trade deal which was previously a close done deal seems far away again
- On the other hand, RBA dovish meeting minutes mentioned that they were seriously considering a rate cut this month but opted for a “wait and assess” approach
- Furthermore, RBA also felt that rates will remain low for now until a reassessment of the economy
- AUD/USD could head lower as the market shifts to a risk-off sentiment with the current uncertainty in the market
Fullerton Markets Research Team
Your Committed Trading Partner
