Fresh US-China political tensions cropped up after the US Senate approved the Hong Kong Human Rights and Democracy Act of 2019 and China threatened to retaliate against the US interference in its internal affairs.
The investor sentiment got heavily hit by the latest Chinese angst as it could weigh negatively on the US-China trade talks. The safe-havens such as the JPY, US dollar and Gold advanced at the expensive of the risk/higher-yielding assets such as Treasury yields, global equities and Antipodeans.
USD/JPY moved off lows, but the recovery lacked follow-through around mid-108s amid risk-aversion. Both the EUR/USD pair and GBP/USD were under pressure. The pound suffered from ITV’s political debate between Johnson and Corbyn that ended on a poor note.
A quiet European calendar, as the only release of note remains the European Union (EU) Financial Stability Review at 09:00 GMT. The UK docket continues to remain a dry one so far this week, as the UK political updates take over ahead of the December 12 elections.
In the NA session, the main event risk remains the US Federal Reserve (Fed) Oct meeting’s minutes due at 19:00 GMT, which will be closely followed for any hints on a Dec rate cut and 2020 US interest rates outlook.
Also, the focus will be on the US weekly Crude Stock data due to be published by the Energy Information Administration (EIA) at 15:30 GMT and the European Central Bank (ECB) policymaker Lane’s speech scheduled at 17:00 GMT.
Oil revisits November-start area after increase in private inventory reports. The energy benchmark previously declined on concerns that Russia will stay away from further supply cuts. Today’s official stockpile numbers in the spotlight for now.
Gold struggles to gain altitude despite renewed US-China political tensions and remains trapped in $1,470-$1,480 range. China reduced the one-year and five-year loan prime rate, as expected, but this has also failed to put a bid under Gold.