U.S. President Donald Trump made no move to impose new tariffs on China during a news conference on Friday where he outlined his response to Beijing’s tightening grip over Hong Kong. Secretary of State Pompeo said the United States now has no basis to treat Hong Kong more favourably than mainland China. The US dollar lost ground against most major currencies as U.S. cities were bracing for another night of violence and demonstrations against police brutality turned into a wave of outrage. Nevertheless, equity markets were unlikely to shift short-term optimism about the U.S. economy with SPX500, NAS100 and US30 all gaining ground.
Australia’s central bank will keep the stimulus flowing when it meets tomorrow, a day before data that will reveal whether a record recession-free run is drawing to a close. Reserve Bank of Australia Governor Philip Lowe is expected to keep both the cash rate and three-year bond yield target unchanged at 0.25%. The bank only bought government securities on two days in May as markets settled and borrowing costs fell. Australia’s economy is emerging from hibernation as governments begin relaxing lockdown restrictions. The RBA sees GDP shrinking 10% in the first half of this year, with most of that concentrated in the current quarter.
The European Union's chief negotiator warned Britain it needs to be "more realistic" in its demands as trade talks continue this week saying that the EU will not accept anything that makes its single market more fragile. FTSE was slightly lower but helped by the reopening of stores following a months-long coronavirus-led lockdown. The euro rose 0.2% to $1.1126, just below a two-month high of $1.1145, as investors drew confidence from the European Union's plans for a coronavirus recovery fund but lost ground against the GBP as €1 now buys less than 90 pence.
Riskier currencies rose against the dollar today as investors looked to positive signs from China’s post-coronavirus economic recovery and wagered on an easing in Sino-U.S. tensions. The trade-sensitive Australian dollar surged 1% to a three-month high of $0.6738 climbing to a three-month high against the Japanese yen and a 10-month high on the AUDCAD. The New Zealand dollar rose about half a percent, along with the British pound and Canadian dollar. The Chinese yuan was down for the second consecutive session, following tensions with the US.
