US equities erase losses ahead of the opening bell

US benchmarks were 1% lower in the morning, but dip buyers reappeared and the decline was quickly erased, with indices now slightly higher on the day ahead of the US opening bell.

Earlier in the day China announced plans to impose a national security law on Hong Kong during its National People's Congress. That is seen as a further escalation in the China-US diplomatic relationship.

Therefore, traders sold riskier assets such as stocks and JPY crosses, but as mentioned previously, the dip was quickly bought.

In FX, the Bloomberg Dollar Spot Index headed for its biggest rise in two weeks and Treasuries gained as investors braced for rising tensions between Washington and Beijing. The Australian weakened against most G-10 peers as sentiment was damped by China-Hong Kong tensions.

Oil was down 3% during the US session, but erased half of its daily losses already. It looks like some profit taking might hit the market after the impressive rally, which brought the oil from 10 USD to 30 USD in three weeks. 
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