US/China Tension Weigh on Risk Tone

5/22/2020 02:37:00 PM
Markets remained risk-off through today's Asia-Pacific session as rising tensions between the US and China continues to weigh on sentiment. Alongside the US criticising China for its handling of the coronavirus outbreak, tensions are also rising over China's treatment of Hong Kong.

China is ready to implement a new national security law for Hong Kong in response to last year's pro-democracy protests, which in itself risked further instability in the former British colony. US President Trump has warned that Washington will react "very strongly" to the law.

In addition, the report said U.S. senators are introducing a bilateral bill to approve officials and entities of the Chinese team enforcing the new national security law in Hong Kong.

We expect US/China developments to remain influential in the sessions ahead; if the risk tone remains risk-off, expect high-beta currencies to remain pressured and safe-haven currencies to remain supported.
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