Safe Haven Flows Will Be Eyed as Hong Kong Protesting Begins

There are growing concerns about the standoff between the United States and China over civil liberties in Hong Kong. Anti-government protesters took to the streets on Sunday, following China’s move to impose tough national security laws on Hong Kong, as reported in the prior blog.

It does risk reigniting pro-democracy protests that saw the city plunging into chaos last year, which is increasing tensions in an already shaky relationship with the United States. Beijing is somewhat determined to stamp out any renewed rebellion against the Communist Party’s authority over Hong Kong.

A senior White House official detailed that China’s plan to impose a security law on Hong Kong could lead to U.S. sanctions.

China, on the other hand, warned of a "new Cold War" with the United States, saying the country had been infected by a "political virus" compelling people there to continually attack China.

The two largest economies in the world are in a deepening war of words amid disputes over the handling of the coronavirus pandemic and trade deals.

What does this mean for the market?

Today - Monday is a bank holiday in the UK and U.S., which means volumes are light/liquidity is thin, so there is much consolidation being observed. However, upon regular trading resuming, safe-haven flows will likely be eyed; USD, JPY and potentially Gold breaking out of its current range-bound behaviour. It is also important to note that this week is the end of the month, which may see some big and erratic market behaviours, as institutional players adjust their portfolios.



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