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Speaking on NBC’s “Meet the Press” on Sunday, White House National Security Adviser Robert O’Brien said, “the US will likely impose economic sanctions on Hong Kong and China if Beijing moves ahead with a proposed national security law for Hong Kong.”

“The US could revoke a special status that allows Hong Kong to function as an international financial hub, stating that it’s “hard to see” how the financial community can remain in the city if the law is enacted,” he added.

In the interview, O’Brien also “drew parallels between China’s handling of the coronavirus outbreak and the Soviet Union’s cover-up of the meltdown at the Chernobyl nuclear power plant in 1986,” as cited by FXStreet’s Analyst, Omkar Godbole.

Market reaction

Amid deepening US-China row over the coronavirus handling and now over the Hong Kong’s autonomy issue, the market sentiment remains fragile, with the US dollar regaining traction across its major peers.

The risk currencies such as the AUD/USD pair manages to recover ground but the further upside appears elusive amid broad US dollar comeback. USD/JPY adds 0.10% to trade around 107.70.