China tells the United States to close the Chengdu consulate. The New Zealand and Australian dollar retreat from a recent peak. The Japanese yen gains. A strong euro has the U.S. dollar headed for the largest weekly drop since June.
China ordered the United States to shut its Chengdu consulate for the closure of its embassy in Texas. As one would expect, China-United States tensions escalated. Thus, on Friday, a slide in the dollar had paused, and the safe-haven yen rose to a one-month high.
The soaring euro was steadfast. Nevertheless, anxious investors pushed the New Zealand and Australian dollars from multi-month peaks. They have roused the weak yen from its recent range. It had the yuan under pressure to a two-week low. In addition, equities fell.
China’s foreign ministry talked. He said that, on Friday morning, the department told the United States embassy to close its consulate in the southwestern city of Chengdu. This happened days after Washington abruptly ordered the closure of the Chinese office in Houston.
The United States
Earlier on Thursday, the United States Secretary of State Mike Pompeo cast United States-China relations in starkly confrontational terms.
He said if they bend the knee now, their children’s children might be at the mercy of the Chinese Communist Party. Their actions are the primary challenge today in the free world. The escalating tensions lifted the yen to 106.38 per the United States dollar.
This is its most reliable indicator since late June. Meanwhile, Asian trading volumes were lightened by a public holiday in Japan.
Moh Siong Sim works at the Bank of Singapore. He is an FX analyst there. He said that the market is taking it as a rise in tension. Nevertheless, this is an in-kind reaction rather than a provocative action.
Thus, there currently the feeling of nervousness and anxiety. Nevertheless, if it will stop there, the market will get used to the idea that they will have a lot of tough talks.