Piotr Matys, the Senior Emerging Markets FX Strategist at Rabobank, notes that Hong Kong has become an even bigger thorn in the already complicated trade talks between the U.S. and China.

• “The CEEMEA currencies came under modest selling pressure with losses led by the South African rand. However, as long as the US and China continue to negotiate and there is sufficient conviction amongst market participants that talks will conclude in a phase one deal being signed in the coming weeks, it is too early to expect a new leg lower in the CEEMEA FX space against the US dollar. For a broad selloff to materialize, trade talks would have to completely collapse as it was the case in August. The Hong Kong Human Rights and Democracy Act is an issue that could slow down the process of reaching an agreement, but one should not overreact and assume that it could become an impenetrable obstacle.”