US Pres. Trump aides rule out ending Hong Kong dollar peg as punishment – Bloomberg

Anil Panchal FXStreet

Having earlier heard from the CNBC that the coronavirus (COVID-19) vaccine is nearby, global traders got additional positive news from the US. This time it’s about its tussle with China. Bloomberg relies on its sources to convey that US President Donald Trump’s aides at the White House and the State Department are stepping back from the possibilities of striking China by limiting Hong Kong’s access to the US Dollar.

Key quotes

Top advisers to President Donald Trump have ruled out undermining the Hong Kong dollar’s peg to the greenback as they seek to punish China for infringing on the territory’s political freedoms, according to people familiar with the matter.

Aides at the White House and State Department had weighed the possibility of limiting Hong Kong banks’ access to US dollars as a way of striking back at Beijing, Bloomberg News reported last week. But they dropped the idea after advocates could not gather enough support, with those against the move concerned that it would be difficult to implement and could end up hurting the US, according to one of the people.

Tensions between the US and China have flared over issues ranging from the competition for military supremacy in the South China Sea to the handling of the coronavirus pandemic.

Market reaction

Despite being another trade-positive update, global markets shrug off the news amid a less active session. However, traders might witness the return of Monday’s risk-on mood based on the news after witnessing the recent souring of sentiment.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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