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Hong Kong has been one (1) of the major roadblocks between the United States and China’s proposed trade deal. Protestors on the city called for the West to interrupt and help the special administrative region to counter China’s growing interference in the city. Hong Kong has been used by China as a scapegoat to defy U.S. sanctions. Huawei’s shell company in Hong Kong was used to make trades and negotiations in Iran and Syria. This led to the arrest of Huawei’s Chief Finance Officer Wang Meng Zhou in Canada where she was facing extradition to the U.S. However, the comments made by U.S. Treasury Secretary Steve Mnuchin decreases the U.S. leverage against China. The comments came amid the upcoming trade U.S.-China trade negotiations aimed at ending the two (2) economies’ trade war. This is expected to further weaken the U.S. Dollar in addition to the recent 25-basis points cut by the Federal Reserves.
European Trade Balance report beat analysts’ estimate and figure from the previous month. The country’s imports increased to $18.7 billion for the month of August compared to the forecasted $17.5 billion. This is also higher from the $14.7 billion a month ago. Data also showed that this has been the European Union’s largest trade balance for the past 16 months. The country’s fourth largest economy, Italy, also tap analysts’ estimate for its consumer price index. For four (4) consecutive months, Spain’s CPI was in a negative territory. But hopes among currency traders are rising as the result showed a positive surprise of 83.33%. This is expected to help the single currency to recover against the Danish Krone. Denmark was the country with the second lowest interest rate, which currently sits at -0.70%, just 10-basis points away from the lowest interest rate of -0.80% from Switzerland.
Turkey hold the cards against the European Union and the United States. The mass immigration caused by the Syrian civil war prompted Turkish President Recep Tayyip Erdogan to warn the European Union to have its fair share of the refugee burden. Turkey recently proposes to create a safe zone on its border with Syria to which the EU and the U.S. initially objected. However, the pullout of American troops in Syria had given Turkey the opportunity to make its way towards ending the conflict. In line with this, despite pressure from the United States, Turkey continued its purchase of Russian defense system. The country was a member of the defense-sharing agreement of the NATO (North Atlantic Treaty Organization). However, Turkey recently announced that it is planning to discuss buying the U.S. Patriot missile defense system with U.S. President Donald Trump. This could result in Turkey acquiring U.S. and Russian weapons.
The British Pound is rising amid the looming withdrawal of the United Kingdom from the European Union. Britain is scheduled to leave the bloc on October 31 and political analysts warned that PM Boris Johnson will do whatever it takes to go out of the European Union. Since its original withdrawal date in March 31, the UK was able to gather economies who will be willing to trade with the country after its withdrawal from the largest trading bloc. Moreover, these countries even go to the extent that they are willing to make trading deals even the UK crashes out of the EU without a deal. Australia, on the other hand, received retaliation from the European Union after it signed a post-Brexit trade agreement with the UK. Brussels banned several exports from Australia containing names originating from any EU-member states. The post-Brexit trade agreement will only be triggered once the UK is officially out of the EU.