Risk Sentiment Suffers On Biden Coments
Along with the current rally in USD, risk sentiment appears to be suffering at the start of the week on the back of comments made by President Biden. During an interview with CBS, when questioned over whether the US military would step in to defend Taiwan in the event of a Chinese attack, Biden confirmed that it would. The comments are somewhat shocking given the traditional “strategi ambiguity” adopted by the US when commenting on Taiwan/China relations.
Beijing was seen hitting back at the remarks immediately, lodging a formal complaint with the US over Biden’s comments. The comments made during the CBS interview are the latest in a series of similar remarks made by Biden. In May, the US president said that the US was willing to get involved in a military capacity to help defend Taiwan if needed.
Risk markets are tumbling on the back of the comments which are seen striking a further blow to US/China relations. Fears of a military conflict between China and Taiwan have increased in recent years and while such an event remains an outlier, comments like these highlight the global repercussions.
Following the breakdown below the rising channel from YTD lows, the market has since stalled at the 452.09 level support. However, with both MACD and RSI bearish, risks of a further move lower remain elevated. If price breaks below the level, look for a retest of the broken bear channel top ahead of a test of YTD lows around 382.89.