The war of words has already started in the opening of the FX markets this week. US Secretary of State Pompeo has said that the Chinese Communist Party’s military advances are real. 

Key quotes

Our department of defense is doing everything it can to make sure it understands this threat.

President Trump will always keep us in a position where we can protect the American people.

Following last Friday’s heated delivery from US President Donald Trump in his China news conference, US Pres. Trump: Will take steps to sanction Hong Kong officials involved in eroding of autonomy, markets are on standby for an official response from China. The South China Morning Post explained that Chinese groups are calling for more ‘fighting spirit’ and are getting the upper hand on those who favour calm and cooperation, a government adviser says. “From Hong Kong to Covid-19, trade to the South China Sea, Beijing and Washington are clashing on a growing number of fronts and in an increasingly aggressive way.”

 

Chinese leader Xi Jinping has told the military, the People’s Liberation Army, to prepare for war! This comes as a growing border dispute between India and China, and threats of invasion of Taiwan threaten the global order and peace as well as heightened tensions with the US. 

Market implications

  • Chart of the Day: AUD/USD is at make-or-break resistance, 0.6400 or 0.6820