- USD/JPY has pulled back to levels below 109.40, having clocked six-month highs in the overnight trade.
- President Trump signed Hong Kong democracy bill, sending anti-risk JPY higher.
- Markets are worried the US move may complicate matters on the. trade front.
The USD/JPY pair is feeling the pull of gravity in the Asian session, possibly due to fears the US’ decision to interfere in Hong Kong may irk China and derail the ongoing trade negotiations.
President Trump signed the Hong Kong Human Rights and Democracy Act in early Asia, reaffirming support for Hong Kong’s pro-democracy protests after majority of the City’s districts flipped in favor of pro-democracy candidates with record voter turnout this week.
China has repeatedly condemned the legislation as meddling in its internal affairs. President Trump’s move, therefore, may strain relationship with China at a time when both sides are trying to reach a “phase one” trade deal.
As a result, the anti-risk Japanese Yen has picked up a bid. The USD/JPY pair is currently trading at 109.38, representing a 0.13% drop on the day. The pair has shed more than 20 pips in the last 90 minutes or so.
Looking forward, deeper losses could be in the offing if the Asian and European equities turn risk averse in response to the latest political developments.
Note that the US dollar was solidly bid during the US trading hours on Wednesday, courtesy of an official data, which showed the US gross domestic product (GDP) increased 2.1% in the third quarter, driven by strong consumer spending. The pair hit a six-month high of 109.61 before losing ground on Trump’s decision to sign Hong Kong Democracy bill.
Technical levels
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