US-China Tensions Back In Focus For Risk Flows

Just when the world thought things couldn’t get any worse, the US and China relationship takes a nosedive with both sides threatening serious retaliatory measures against each other. This week, the strained relationship will take center stage as markets digest the recent and possible actions from both sides.
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Remember the Coronavirus? Oh yeah, it’s still here, but the market isn’t really focusing on the big elephant in the room with the escalating tensions between the US and China.

After heated rhetoric, China might have opened the door for actual action from the US when they announced national security legislation in Hong Kong. For those who don’t know, the US warned China that doing that will force them to respond, not in a nice way.

Over the weekend the two sides kept news wires busy once more with further threats and allegations. Just when the world thought things couldn’t get any worse. This stained relationship will take center stage this week as markets digest the recent as well as the potential actions and counteractions from both sides.

With all this the attention will be firmly fixed on overall markets sentiment. Thus, our focus will be on risk sentiment, looking to take advantage of strong risk-on and risk-off flows.

This week ahead video will help you prepare for this week’s upcoming events and provide insights into how you could possibly trade it as well.

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Highlights of the video:

01:06 – Current Baseline

06:03 – Baseline expectations for the upcoming risk event

08:41 – Possible sentiment shifts

11:42 – Possible currency pairs to consider

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