Trump’s “risk aversion” has soared. The dollar goes up! RMB us crude oil staged a “platform diving”!

On Wednesday, the U.S. dollar rose on safe-haven demand amid concerns about the U.S. response to Hong Kong’s national security laws, while major non-u.s. currencies such as the euro and the yuan came under pressure, with the offshore yuan plunging more than 400 basis points to its lowest level since September 2019. Us WTI crude fell more than 5 per cent as oil prices fell on concerns about the us and China. U.S. stocks pared gains as technology stocks fell, with the standard & poor’s 500-stock index erasing an earlier 1.5 percent gain. U.S. President Donald trump said on Tuesday the United States would announce its response to China’s planned Hong Kong national security law by the end of the week, prompting a swift recovery in risk aversion in markets.

The offshore yuan fell to its low in September last year

The dollar edged higher Wednesday, with the yuan falling to a near nine-month low against the greenback, as concerns about the U.S. response to Hong Kong’s version of the national security law injected a more cautious tone into currency markets.

The dollar fell sharply on Tuesday as strong risk appetite encouraged investors to buy riskier currencies, but sentiment was far less buoyant on Wednesday.

Some investors are betting ona quick recovery in economic activity following the severe novel coronavirus outbreak, but others fear that the threat of us sanctions against China over its handling of Hong Kong could easily reignite risk sentiment.

“Yesterday’s rebound in risk appetite has run out of steam. This seems to be true, but not just because of tensions between the United States and China, “said Thu Lan Nguyen, a foreign exchange analyst at commerzbank.

Even as countries reopen their economies, Nguyen said, the economic outlook remains uncertain, especially when it comes to predicting how consumers will behave once they can shop and travel more freely.

The dollar rose 45 points to 99.32 after falling to a session low of 98.87.

The European commission unveiled a 750 billion euro ($826.5 billion) recovery fund as the region faces its worst economic crisis since the 1930s.

The €750 billion includes €500 billion in grants (in the form of rescue money) and €250 billion in loans to member states. Of the €500bn in loans, €310bn will be invested in green and digital transformation.

The plan, if agreed, could be seen as a concession by the eu’s four “thrifty” members — Austria, Sweden, Denmark and the Netherlands — who have long resisted the creation of a recovery fund that is not based on loans.

Wednesday’s proposal opens discussions among the eu’s 27 member states, whose leaders will meet on June 18, possibly by video call, to try to agree on the details of a recovery fund.

Meanwhile, there are other short-term measures across Europe. The European central bank is buying government bonds as part of its 750 billion euro program, with another 540 billion euros available for unemployment programs, business investment and loans to governments.

Marshall Gittler, investment analyst at BDSwiss group, said: “if the European commission approves this new proposal, it will reduce the risk of a recession in peripheral Europe, particularly Italy, and increase the likelihood of a synchronised recovery across the continent. The plan will be positive for the euro.”

Arkera hold different views, a strategist at Viraj Patel, argues that “the euro recovery funds to stimulate some late, smaller than the United States, and can’t solve the risk in the euro formally, (especially in the name of its surrounding recovery fund), the most important is that its not fully agree, may be at a discount, need high alert after the euro.”

Japan is also taking another shot at stimulus: on Wednesday, the government said it would pass a second supplementary budget for 2020, which would allow the Abe administration to spend more than 234 trillion yen on fighting the epidemic and promoting economic recovery.

But most notable was the offshore renminbi, which fell to its lowest level against the dollar since September.

The offshore yuan fell below 7.19 against the dollar, down more than 400 basis points on the day, to its lowest level since September 2019.

The onshore renminbi approached 7.17 against the dollar. If the onshore renminbi falls below its September low, it will be at its lowest level since 2008.

US President Donald trump said on Tuesday the us would announce its response to China’s planned security law on Hong Kong by the end of the week.

“We are in a broad risk taking trend, but the only thing that can change that is the us-china relationship,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

“If more problems emerge between the two countries, it will slow the dollar’s recent decline and could lead investors to buy the dollar as a safe haven.”

Technology stocks fell to offset optimism about the economic recovery

On Wednesday, stocks gave up most of their early gains as declines in technology stocks offset optimism about an economic recovery.

In early trading, the standard & poor’s 500 index was down slightly after rising as much as 1.5 percent. On Tuesday, the index briefly breached the 200-day moving average and the 3000 level. The s&p 500 has not closed above 3,000 since march.

The European commission unveiled a 750 billion euro ($826.5 billion) recovery fund as the region faces its worst economic crisis since the 1930s.

The €750 billion includes €500 billion in grants (in the form of rescue money) and €250 billion in loans to member states. Of the €500bn in loans, €310bn will be invested in green and digital transformation.

The plan, if agreed, could be seen as a concession by the eu’s four “thrifty” members — Austria, Sweden, Denmark and the Netherlands — who have long resisted the creation of a recovery fund that is not based on loans.

Wednesday’s proposal opens discussions among the eu’s 27 member states, whose leaders will meet on June 18, possibly by video call, to try to agree on the details of a recovery fund.

Meanwhile, there are other short-term measures across Europe. The European central bank is buying government bonds as part of its 750 billion euro program, with another 540 billion euros available for unemployment programs, business investment and loans to governments.

Marshall Gittler, investment analyst at BDSwiss group, said: “if the European commission approves this new proposal, it will reduce the risk of a recession in peripheral Europe, particularly Italy, and increase the likelihood of a synchronised recovery across the continent. The plan will be positive for the euro.”

Arkera hold different views, a strategist at Viraj Patel, argues that “the euro recovery funds to stimulate some late, smaller than the United States, and can’t solve the risk in the euro formally, (especially in the name of its surrounding recovery fund), the most important is that its not fully agree, may be at a discount, need high alert after the euro.”

Japan is also taking another shot at stimulus: on Wednesday, the government said it would pass a second supplementary budget for 2020, which would allow the Abe administration to spend more than 234 trillion yen on fighting the epidemic and promoting economic recovery.

But most notable was the offshore renminbi, which fell to its lowest level against the dollar since September.

The offshore yuan fell below 7.19 against the dollar, down more than 400 basis points on the day, to its lowest level since September 2019.

The onshore renminbi approached 7.17 against the dollar. If the onshore renminbi falls below its September low, it will be at its lowest level since 2008.

US President Donald trump said on Tuesday the us would announce its response to China’s planned security law on Hong Kong by the end of the week.

“We are in a broad risk taking trend, but the only thing that can change that is the us-china relationship,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

“If more problems emerge between the two countries, it will slow the dollar’s recent decline and could lead investors to buy the dollar as a safe haven.”

Technology stocks fell to offset optimism about the economic recovery

On Wednesday, stocks gave up most of their early gains as declines in technology stocks offset optimism about an economic recovery.

In early trading, the standard & poor’s 500 index was down slightly after rising as much as 1.5 percent. On Tuesday, the index briefly breached the 200-day moving average and the 3000 level. The s&p 500 has not closed above 3,000 since march.

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