Friday, August 7, 2020 11:56 AM EDT
The United States sanctioned Hong Kong Chief Executive Carrie Lam and other Hong Kong government officials Friday morning, sending USD/CNH near the 7.000 level. This latest move adds to the already tense stance in US-China relations as Trump took executive action earlier this week to ban business dealings between TikTok’s parent company and U.S. citizens.
USD/CNH 5-MIN PRICE CHART
(Click on image to enlarge)
Source: IG Charts
Although tensions cooled earlier this year following the signing of the phase-one trade deal, rhetoric picked up once again as China’s actions in Hong Kong garnered condemnation from The United States. U.S. Secretary of State Pompeo said that the move by the United States sends a message that the actions taken by Hong Kong’s government officials are not acceptable. China has yet to officially respond to the latest move.
Looking at U.S. equities, the key stock indexes reacted negatively to the news, with the S&P 500 and Dow Jones down 0.12% and 0.27%, respectively. This follows a better than expected jobs report, which revealed the U.S. unemployment rate dropping to 10.2%, with 1.7 million jobs added. A potential response from the Chinese government could potentially be delivered in the coming days, which could further spur risk-aversion.
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