US Pres. Trump aides weigh proposals to undermine Hong Kong’s dollar peg – Bloomberg


US Secretary of State Mike Pompeo joins some of the top advisers in the Trump administration to consider using the Hong Kong dollar’s peg with the US currency. The move aims to punish China for recent moves to chip away at the former British colony’s political freedoms, per the Bloomberg.

Key quotes

The idea of striking against the Hong Kong dollar peg -- perhaps by limiting the ability of Hong Kong banks to buy U.S. dollars -- has been raised as part of broader discussions among advisers to Secretary of State Michael Pompeo and hasn’t been elevated to the senior levels of the White House, suggesting that it hasn’t gained serious traction yet, according to people who discussed the matter on condition of anonymity.

The proposal faces strong push back from others in the administration who worry such a move would only hurt Hong Kong banks and the U.S., not China, they said.

Another person cautioned that the idea of attacking the dollar peg is lower on the list of possible options now under discussion. Those ideas include canceling a U.S.-Hong Kong extradition treaty and ending cooperation with Hong Kong’s police, the person said.

Hong Kong has pegged its currency to the U.S. dollar since 1983, allowing it to fluctuate within a fairly strict band that has generally centered around 7.8 per U.S. dollar.

The very idea that undermining the peg has even been raised offers some insight into the range of discussions now underway for punishing China. The idea has primarily been discussed at the State Department, where Pompeo has emerged as the administration’s loudest critic of Beijing’s recent decision to impose a new national security law on Hong Kong.

Market reaction

In addition to weighing on the market sentiment, the news also adversely affects the USD/HKD pair. As a result, the S&P 500 Futures recede the day-start consolidation of Tuesday’s losses whereas USD/HKD seesaws around 7.75.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD extends gains as ADP NFP disappoints with only 167K

EUR/USD is trading above 1.1850, extending its gains after ADP's private-sector report badly misses expectations with an increase of only 167,000 jobs in July. The greenback had already been falling with yields.

EUR/USD News

XAU/USD bulls unstoppable, renews life-time highs near $2040

With ‘buy the dips’ emerging as the main underlying theme behind the gold price action so far this week, the bulls flex their muscles further to record fresh all-time highs near $2040.

Gold News

GBP/USD trades well above 1.31 amid dollar weakness

GBP/USD is advancing towards this month high at 1.3169, recovering as the dollar retreats. The UK government is under scrutiny for its management of the virus crisis. US Services PMIs are eyed. The ADP NFP missed with 167K.

GBP/USD News

ETH/BTC on retreat, BTC recovery gains traction

ETH/BTC has topped at $0.03528 on Tuesday and retreated to $0.03448 by the time of writing. The cross has lost about 1% since the start of the day. The RSI on a daily chart reversed to the downside, signaling that the price is ready for a correction from overbought territory.

Read more

WTI hits fresh two-week highs near $42.50 ahead of EIA data

WTI (futures on Nymex) extends its winning-streak into the third straight day on Wednesday, as the bulls challenge the July high of $42.51.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures