In a response to being ordered to close its consulate in Houston, China bites back with ordering the U.S. to shut its consulate in Chengdu.
This week, the tension between the US and China has reached a new front: consulates. The United States gave China until today to close its consulate in Houston following allegations of spying. China urged Washington to reconsider and has vowed to respond. And it responded: China ordered the United States to close its consulate in the city of Chengdu on Friday.
Secretary of State Mike Pompeo accused the Chinese consulate in Houston of being a spying hub of “intellectual property theft”.
Relations between the two economic giants have been worsening sharply since the beginning of 2020 for various reasons including their trade spat. Pandemic, territorial claims in the South China Sea and the clampdown on Hong Kong are challenging for the two countries.
Further, the number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months. This rise suggests the labor market was stalling amid a resurgence in new COVID-19 cases and depressed demand.
Focus is also on the next U.S. fiscal rescue package, which is deadlocked in Congress. A month-end deadline looms as some unemployment benefits are due to expire.
Britain and the European Union clashed on Thursday over the chances of securing a free trade agreement. Brussels deemed it “unlikely” but London held out hope one could be reached in September.
START TRADINGForex – China bites back with consulate closure
Weaker-than-expected U.S. employment data had rattled U.S. markets overnight. Besides Sino-U.S. tension, investors are looking to a slew of PMI figures for a read on economic recovery progress.
The U.S. dollar hit four-month lows against a basket of peer currencies on Thursday. The dollar index hit its lowest since March 9 and has lost nearly 8% since its March 20 peak. It is down 1.5% year-to-date.
The yen was last up 0.6% at 106.25, its highest since June 23, due to the deterioration of the US-Sino ties.
The euro was flat at $1.1598, with the U.S. dollar losing some of its appeal as a safe haven.
The Australian dollar was down a fifth of one percent on the session at $0.7086. Aussie is ahead 1.3% for the week, but almost a cent below a 15-month high hit on Wednesday.
The New Zealand dollar was at $0.6625, just under a 7-month high of $0.6690 touched on Thursday.
The safe-haven Swiss franc also hit a four-month peak of 0.9239 per dollar.
Meanwhile, sterling was broadly steady against the dollar and edged up versus the euro on Friday. But the British currency is still on track for its biggest weekly gain versus the dollar since the first week of June.
The pound held broadly steady at $1.2746. Sterling strengthened versus the euro as the single currency eased some of its recent gains. Euro-sterling was at 90.89 pence per euro at 1114 GMT, with the pound up around 0.2% on the day.
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Sources: Reuters, Investing, CNN money