China warned the United States that it would take “firm counter measures” in response to U.S. legislation backing anti-government protesters in Hong Kong.
Mass protests for more democracy and autonomy have rocked the former British colony. More than 5,800 people have been arrested since June. The escalating violence raised fears that China will ratchet up its response to end the unrest. The Senate and House passed the “Hong Kong Human Rights and Democracy Act” last week. It put the special treatment Hong Kong enjoys under U.S. law under tighter scrutiny linked to the extent of the territory’s autonomy from Beijing.
The U.S. legislation prompted China to warn of “firm counter measures”. China also added that attempts to interfere in the Chinese-ruled city were “doomed to fail”. They would retaliate for U.S. legislation backing Hong Kong’s protesters, leaving investors concerned as to the extent of the Chinese response. China’s state council said that it would step up punishment for intellectual property violations. The latter is a key sticking point in the U.S.-China conflict – and that it would lower non-tariff trade barriers.
However, risk appetite started to return in London trading. The absence of signs that the negotiations for a “phase one” US – China trade deal had been jeopardized weighed.
Risk-sensitive currencies fell on Thursday after U.S. President Donald Trump’s formal endorsement of Hong Kong’s anti-government protesters. The Swiss franc and gold also rose as investors sought other safe harbours due to concerns about a potential increase in geopolitical risk.
Forex – China warns of retaliation on US bill on Hong Kong
Record-low volatility and the U.S. Thanksgiving holiday mean traders are expecting a quiet day in markets. U.S. markets are closed for Thanksgiving.
The US dollar was little changed as a mild overnight risk-off move, sparked by the US and China clashing over Hong Kong, subsided. The dollar index was last up less than 0.1%, trading within narrow ranges.
The trade-exposed Australian dollar traded almost flat against the U.S. dollar, recovering from six-week lows hit in overnight trading due to a combination of the risk-off mood and weak domestic data.
The safe-haven Japanese yen was up around 0.1% versus the dollar, recovering from six-month lows.
The Swiss franc was up less than 0.1% versus the dollar.
The pound rose on Wednesday after a model for pollsters YouGov said Prime Minister Boris Johnson was on course to win a majority in parliament at the Dec. 12 election. But, the currency failed to build on its gains, trading steady against the dollar at $1.2926. It was little changed versus the euro after surging to its highest in nearly seven months at 85 pence in early London trading.
Oil prices fell for a second day after official data showed U.S. crude and gasoline stocks rose against expectations as production hit a record. Brent crude futures were down 22 cents at $63.84 a barrel by 0735 GMT, having dropped 0.3% on Wednesday. U.S. West Texas Intermediate crude fell 33 cents, or 0.6%, to $57.78, after falling 0.5% in the previous session.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money