Nothing ever comes easy in these markets, just when you think you finally have the right position on you get sideswiped by more economic war escalation headlines.
Although I have no idea what will happen next, rest assured that furious paced headline-driven price action will definitely occur over the next 24 hours.
Hong Kong
Bloomberg reports that China will retaliate after the US House of Representatives on Tuesday passed a bill that would require the US government to assess whether political developments in Hong Kong justify Washington changing its treatment of the territory as a separate trading entity from mainland China.
Let's hope something good will come out of Chief Exec Lam policy address at 11 AM HK.
While considering HK a separate trading entity is still an implausible scenario at this point, needless to stay If the US house passes legislation along bipartisan lines, it could potentially derail trade talks indefinitely regardless of who's in power after election 2020.
YUAN Watch
Asia key risk bellwether USD/CNH gapped higher on the Bloomberg headline but ran into sellers just above 7.09 ahead of the Yuan reference rate fix.
The Fix was less market-friendly than it could have been suggesting that the mainland is intent on waiting for the US December tariffs to be lifted before nudging the fix any stronger. Once again, bridging this trust gap always seems like a bridge too far when it comes to walking the talk.
USD/CNH has gapped through 7.10 after the unfriendly market fix, at this point I’m thinking someone is trying to run some stops, but so far sellers remain in the game just above that fundamental 7.10-7.1050 level
Europe
ON the other trade war front, The FT reports that the EU will take anti-competitive measures against an American semiconductor manufacturer. The EU's dispute with the companies is that US chipmakers require exclusive contracts with TV and modem makers. The EU claims this is unfair. The decision to impose anti-competitive measures is likely to be a so-called interim measure, which will prohibit the company from certain activities during the EU's investigation (likely several years).
BREXIT
Sterling traders’ nerves are on edge as a constant stream of headlines are squawking down the box.
And getting more fidgety by the minute after Former UK Brexit Secretary David Davis tells Sky News that he "thinks" most MPs will support the deal PM Johnson has negotiated. He said the sense among many MPs is that this is "the last play". Any hint of uncertainty with the market so heavily vested will likely send shivers down investors spine. But with Cable liquidity running very sparse in Asia this morning it does suggest moves could be exaggerated by the lack thereof (liquidity).