Hong Kong is boiling and US Pres. Trump is stuck at a crossroads – Nordea

Analysts at Nordea Markets raise concerns of the United States (US) President Donald Trump’s position while looking at the Hong Kong bill’s ability to affect the odds of the Republican leader’s odds of re-election and a trade deal with China.

Key quotes

“To sign the Hong Kong bill or not to sign. If Trump wants a deal done with China soon, he may be tempted to veto against the Hong Kong bill but on the other hand, he may look weak ahead of the final negotiations, if he veto’s the Hong Kong bill just to be on good terms with China. It could also be costly for Trump’s reelection odds if he doesn’t look tough on China.”

“The easing announced by the People’s Bank of China (PBoC) on Monday (a cut to the 7-day lending rate) was another signal that China feels a little more on top of negotiations currently. How does further Chinese easing rhyme with Trump’s wish to stabilize the USD/CNY outlook?”

“Had it been Draghi that had cut interest rates amid a Euro area vs. US trade negotiation, then Trump would have been extremely vocal on Twitter. So far, Trump has been unusually quiet on the PBoC easing. Maybe Trump has lost a little focus on the international agenda due to the impeachment process?”