Worries concerning tensions between China and the United States hurt demands for riskier assets. The New Zealand dollar eased to $0.6195. Meanwhile, the Australian dollar fell to $0.6642.
The United States dollar remained locked in a narrow range at 107.53 yen. Nevertheless, against the euro, the yen rose. Moreover, it also raised against the antipodean currencies thanks to increased safe-haven demand.
Many places were hit harder by the coronavirus pandemic. Those places are now allowing more businesses to resume to normal operations. Thus, on Tuesday, this led to an unwinding of safe-haven bets.
The United States Treasury yields and Asian stocks fell. Thus, on Wednesday, the move faded, showing that risk aversion remains.
On Tuesday, The United States President Donald Trump held a speech. He said that the United States would announce, before the end of the week, about its response to China’s planned security bill for Hong Kong.
Bloomberg News reported that administration of Trump is considering sanctions on Chinese officials.
Per the United States dollar, the yuan fell to 7.1595 onshore. This is the lowest indicator since September 2019. China companies listed in Hong Kong bought dollars to make dividend payments to their overseas investors. This exacerbated the decline of yuan.
A trader at a Chinese bank in Shanghai said that they are approaching a half-year end. This is because this is the traditional dividend payment season. Trader continued that usually, such conversion should kick in later.
Expectations of yuan depreciation were up again. Some companies were afraid that the yuan could fall further. Thus, they have started loading up on dollars now.
The Media reported that on Wednesday, Beijing expanded the scope of the draft national security legislation to included individuals and organizations as well.
China and the United States have repeatedly clashed over several topics. Namely, trade policy, China’s response to coronavirus, and advanced technology. Coronavirus originated in the central province of Hubei late last year.
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