- Safe haven USD rises as China moves ahead with security measure in HK
- Trump threatens retaliation and sanctions by the end of the week
- EUR awaits EC stimulus package announcement
- At 08:15 UTC, EUR/USD -0.2% at US$1.0950 >> Real time exchange rate
The Euro is trading mildly lower versus the US Dollar, paring some gains from the previous session. The Euro US Dollar exchange rate settled on Tuesday +0.75% at US$1.0982, after failing to break through the key psychological level of US$1.10.
At 08:15 UTC, EUR/USD is trading -0.2% at US$1.0950 amid rising Honk Kong tensions and ahead of the European Commission rescue package announcement.
China finalising a security measure, reinforcing its grip on financial hub Hong Kong, and a possible reaction from the White House are dominating market headlines at the start of the European session, weighing on risk sentiment.
As protesters take to the streets in the ex-colony, Trump is under mounting pressure from both Republicans and Democrats to respond to China’s manhandling of Hong Kong’s legal system, rocking an increasingly hostile relationship with China.
The US is considering a range of sanctions on Chinese officials, businesses and financial institutions over the crackdown on Hong Kong liberties. Trump threatened that Hong Kong will lose its place as Asia’s financial hub if the measures from China are pushed through.
Cooling relations between the two powers is boosting demand for the safe haven US Dollar whilst adding pressure to the Euro.
The Euro is showing some resilience against a stronger US Dollar as Eurozone countries continue to ease lockdown measures and reopen their economies.
Euro traders will look ahead to a speech by ECB President Christine Lagarde, which could give further clues on the central bank’s next moves. However, with the ECB monetary policy decision due next week, she could be cautious with what she reveals.
The central bank has been urging governments to do more and there could be more news on this front today. The European Commission is expected to announce a new coronavirus stimulus package, building on the French German agreement. The French German agreement was particularly poignant because it included raising joint European debt an important change in policy and an stabilising factor.
