Money Flows: Risk off, US are resting, Trump annoys the Chinese again

Trump blinked first. Bluff or not, he formally issued a decree authorizing Washington to interfere in Hong Kong politics with the pretext of defending democracy and protesters from the repression of Carrie Lam. It happened in the "quiet period" between the end of the US and the beginning of the Asian session, just as the US had already withdrawn for Thanksgiving with the gains gained in recent weeks.

The response from China and Hong Kong was not too late, which was more than angry and even threatening. China's last call to the US was that they would "respond with countermeasures". Now, depending on the response, we will also know whether the tariffs will remain full or increased on December 15. However, there is speculation that the two parties are trying to separate Hong Kong from the trade negotiations themselves, and this event would not affect the Phase 1 negotiations.

The outflow of risky assets was sudden, with USD / JPY strongest. The yen and gold react most strongly as safe heaven assets. The US dollar is trading at a slight decrease. Oil remains slightly downgraded after the news. European index futures point to a weaker opening. Today, we expect cash flows to remain more focused on defensive instruments. We have a slight rise in volatility.

The economic calendar is almost empty today. European traders later today will expect inflation data from Germany.

Thanksgiving is going to be quite thin today and tomorrow. Given the reduced risk of appetite, movements may remain limited due to the lack of a large number of market players. We will expect developments later in the day.

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