- Thousands of Hong Kong protesters on Sunday chanted the US national anthem.
- China denies the accusation of meddling but has denounced the protests.
- AUD/JPY has been moving higher as trade talks look set to be back on the cards.
Casting minds back to last month, Trump suggested China should “humanely” settle the problem in Hong Kong before a trade deal is reached with Washington – This is one of the reasons that attention should be paid to Hong Kong.
Hong Kong leader Carrie Lam announced concessions last week
Hong Kong leader Carrie Lam announced concessions last week and was formally scrapping a hugely unpopular extradition Bill, which ignited the protests back in June – but it seems too little too late and over the weekend, more protests took a hold of the streets of Hong Kong.
Thousands of Hong Kong protesters on Sunday chanted the US national anthem and called on US President Donald Trump to “liberate” the Chinese-ruled city. However, the demonstration, yet again, ended in violence and US Defense Secretary Mark Esper on Saturday urged China to exercise restraint in Hong Kong. China denies the accusation of meddling but has denounced the protests. moreover, China has been accusing the United States and Britain of fomenting unrest and warned of the damage to the economy. While there has been no sign, so far, that Hong Kong will interrupt trade talk progress, it is nonetheless a risk that markets are paying attention to.
FX implications:
AUD/JPY has been moving higher as trade talks look set to be back on the cards with high-level meetings taking place as soon as next week. The risks of deterioration in talks, would, however, knock the wind out of the pair as the FX space’s risk barometer and considering the Reserve Bank of Australia’s position on the talks, the sentiment of a rate cut will keep the Aussie contained.
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