China make a power grab for HK
UK data all worse
UST 10Y 0.65
Asia and the EU
GBP UK Retail Sales -18% vs. -15% eyed
CAD Retail Sales 8:30
It's been a wary night of trade with risk-off flow dominating Asian and early Europen dealing as escalating tensions between US and China had investors on edge.
The dollar was mildly bid across the board and US stock index futures were lower by about 50 basis points with markets fearful that US-China war of words may become a much more serious political conflict.
The latest salvo from Beijing was the introduction of a new Security Law. As well as criminalizing "treason, secession, sedition (and) subversion" against the central government, it will also enable Chinese national security organs to operate in the city "to fulfill relevant duties to safeguard national security in accordance with the law." The law would effectively destroy much of Hong Kong's autonomy and sent a shiver through the island's capital markets with Hang Seng dropping the most since 2015. China was quick to note that this was an internal matter and would not accept any interference from the outside world but given the already negative sentiment against China in the US Senate some political and economic response is sure to come.
For now, the markets remain wary rather than reactive with only a muted response in price action as traders watch the Sino-US relations deteriorate. The bulls continue to control the market as every dip is bought and the recovery thesis trumps all geo-political risks for now. With no US data on the docket, it will be interesting to see if the bulls can rally prices into the long holiday weekend. We are skeptical they can do so. Given the dour economic backdrop and the very real possibility of violence in Hong Kong, the risks to the downside have increased markedly and markets will only be able to ignore them for so long before selling pressure begins to take hold.
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.