 The conditions for risk reversal continued to build up last week and somewhat intensified. On the one hand, daily new coronavirus cases surged to new high for the world world, as well as for the US. Daily global new deaths were steady and the US death tolls trended down. Yet, the development is enough for worries on at least a delay in reopening, with risks of reversing ease of restrictions. On the other hand, the stage was also set for an acute deterioration in US-China relations. Senate passed the so called Hong Kong Autonomy Act by unanimous vote on Thursday. Secretary of State Mike Pompeo also announced on Friday visa restrictions on Chinese Communist Party officials believed to be responsible for undermining freedoms and autonomy in Hong Kong. The CCP is set to ignore global condemnations and impose new "national security" laws on Hong Kong by this week, bypassing they city's own legislature. That would in turn very likely trigger new sanctions from the US, and possibly from other countries too. In spite of the developments, risk reversal is not clearly confirmed yet. US stock indicates could merely be extending near term consolidations. There was no sustainable buying in Dollar, nor Yen. Gold's up trend resumption could be a sign, together with the break of near term support in GBP/CHF and EUR/CHF. Yet, more levels need to be taken out before confirming the come back of risk aversion. |
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