USD finished this trading week on a high note as investors were forced to reassess the significance of safe-heaven factor in the US currency as concerns over China growth outlook, confrontation with the US and second possible Covid-19 outbreak continue to mount.
The dollar was offered support on Thursday on the news that China plans to pass a national security law in Hong Kong, despite protests in the city in the second half of 2019.
Chinese Prime Minister Li Keqiang said at the opening of the All-China People’s Congress on Thursday: “We will create a reliable legal system and mechanisms to ensure national security in the two special administrative regions of the country and ensure that the governments of these two regions fulfill their constitutional responsibilities.”
These plans provoked an immediate reaction from the United States: President Donald Trump said the United States would react decisively if China enacted these laws, and two US senators were already drafting a bill to sanction entities supporting the law.
China dropped its GDP target for 2020 citing significant downside risks surrounding outlook. Risk assets declined with bearish impulse remaining in play for the next week.