The ongoing tensions between the United States and China have not gone away, as reports suggest that China is being forced to close its Houston Consulate.
A Chinese foreign ministry official detailed:
The US has abruptly informed China to close its consulate in Houston. China strongly condemns this outrageous move and urges the US to correct its wrong decisions or there will be retaliation.
Further on from this, comments coming from a U.S. State Department official, confirming the reports by saying:
We have directed the closure of the Houston Chinese consulate in order to protect US intellectual property and American private information. The US will not tolerate the PRC's violation of our sovereignty and intimidation of our people.
What does this all mean for the markets?
The further escalation of friction between the two largest economies in the world is certainly not good for market sentiment. Focus had shifted away from the U.S. and China’s bickering, however, it could very well regather market focus.
In terms of initial reactions to the current reports, riskier assets and riskier FX have pulled away from their respective session high prints. The moves are not presently huge, but once again there is an element of caution injected back into these recent risk-on plays being seen. There is also room for a needed technical correction, following this heavy beating seen for the USD versus its peers.
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