China and the US were locked in a trade war in the last two years, with hundreds of billions worth of tariffs both ways. But, by the last quarter or 2019 they reached an agreement and signed the Phase One deal, which improved the sentiment in financial markets. Although, with the outbreak of the coronavirus the situation has deteriorated again.

China went into the offensive, taking over Hong Kong and planning to take over Taiwan, which increased tensions between the two countries, while earlier today it expelled US officials from the Chengdu consulate, making some comments as well. This has hurt the sentiment a little and if the situation escalates with US expelling Chinese diplomats, then the sentiment will turn negative, as tensions escalate. This should also keep commodity dollars subdued Below are the comments form Chinese officials.

Comments by the Chinese foreign ministry

• US’ Chengdu consulate diplomats must leave China in 30 days
• US must close Chengdu consulate within 72 hours
• US is totally responsible for current bilateral situation