US Senate passes bill supporting Hong Kong pro-democracy protesters bringing strong rebuke from China
Peter Compton " | November 20, 2019
Financial markets sold off around the world while the US dollar and other safe-haven currencies outperformed. The US support of Hong Kong protesters will greatly reduce Chinese interest in any trade deal. The Canadian dollar weakened again on dovish comments from a central bank official.
November 20, 2019
EUR/USD 1.1072 GBP/USD 1.2916 USD/CAD 1.3287 AUD/USD 0.6816 USD/JPY 108.66 USD/CNH 7.0373 USD/ILS 3.4744 USD/MXN 19.4485 USD/CHF 0.9929 USD/INR 71.9150
Weary investors piled into the US dollar as uncertainty around US/China relationship causes a risk-off selloff. President Trump has increased pressure on China in the trade talks by stating that he would raise US tariffs on Chinese goods if no deal is reached. In a sign of further strain on the US/China relationship, China’s Foreign ministry has strongly condemned a US senate bill which effectively shows support for HK protesters by banning the export of certain munitions to HK police.GBP
The pound weakened for a second day as election jitters hit the FX markets. A snap poll after the first live television debate last night showed Labour gaining on the Conservative lead. During the debate, PM Johnson stated that the UK can absolutely agree a post Brexit trade deal with the EU by the end of 2020. Meanwhile Corbyn said that he would carry-out the result of a second referendum and look to end austerity.EUR
The euro weakened vs. the US dollar after German PPI data for October came in weaker than expected at -0.6%.CAD
The C-dollar was weaker late yesterday after dovish comments from a member of the central bank but has since regained strength. Oil prices climbed today after two days of losses as growing tensions in the Middle East continue, following Israeli air strikes in Syria.ASIA/PACIFIC
The offshore Chinese renminbi sank following the US Senate passing a bill in support of Hong Kong protesters, thus clouding the outlook for a trade deal. The Indian rupee settled slightly stronger as the price of oil has fallen over 4% this week. However, the rupee is still trading close to its weakest levels over the past 12 months.
The Japanese yen headed for a third day of gains on safe-haven buying.