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Citing officials from countries involved, Kyodo news agency reported late Sunday that Japan has decided not to back the US, UK and other countries condemning China’s forceful imposing of a new security law on Hong Kong.

In response to China’s new legislation on HK, Tokyo issued a statement May 28, citing the nation was “seriously concerned” about the move.

The US is aggressively looking to punish China over the aforesaid issue while other matters, including Beijing’s coronavirus mishandling, continue to threaten the phase one trade deal reached between the two countries.

Japan’s decision may not go down too well with the US, its close ally.

Market reaction

The early risk-on market mood is seen stabilizing amid Australia-China tensions and rising number of virus cases in the US. The US dollar is off the lows when compared to its main rivals while USD/JPY bounces-back to regain 109.50.