Risk returns as China-US relationship worsens again


Traders sold equities and bought the greenback on Monday as risk sentiment soured due to US riots and worsening China-US diplomatic relationship.

Stock indices were down circa 1% ahead of the US opening bell, but EU indices rose half a percent today. 

Earlier in the day, reports hit that that state-owned traders Cofco and Sinograin were ordered to suspend purchases of some American farm goods including soybeans. 

At the same time, China also accused the US of undermining bilateral relations and said its comments regarding Hong Kong “disregarded facts,” days after President Donald Trump moved to rescind the city’s special trading status.

Moreover, the eurozone's manufacturing PMI for May was revised to 39.4 from 39.5 in the preliminary result. This is not so bad, but neither so good as the worst seems to be over, but the sector remains weak. 

The EURUSD pair failed to break the 1.1150 resistance and we might see a correction toward the 200-day moving average at 1.1020 if the pair stays below 1.1150.
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