Responding to the Washington Post (WaPo) report that the Trump administration was considering canceling some debt held by China, in light of the coronavirus spat, White House Economic Adviser Larry Kudlow denied of any such plans.
Kudlow said: “The full faith and credit of US debt obligations is sacrosanct. Period. Full stop.”
“Similarly, is the reserve currency status of the US dollar. The story’s completely wrong,” he added.
Meanwhile, US President Donald Trump said that he could use tariffs to respond to China.
Market reaction
The risk-aversion is playing out well in Asia amid renewed US-China trade jitters while light trading leave markets in a limbo, with Labor Day observed in some of major economies worldwide.
USD/JPY treads water on 107.00 while AUD/USD remains heavy above 0.6450. S&P 500 futures are down 1.40%. The US dollar attempts a bounce from Thursday’ sharp drop.
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