Further suppression of Chinese yuan strength continued during the session as Wu Yi, Chinas most senior trade official, pledged to fight current WTO sanction submissions by the US. Stating that officials will be fighting until the end, Wu accused US policymakers as ignoring recent efforts by the Chinese government to crack down on piracy and trademark infringements. As late as last month, Chinas government has instituted increased pressure on copyright infringement, which costs the US entertainment industry billions of dollars in revenue. Currently, the State Intellectual Property Office is revising current laws, hoping to create stricter standards throughout the country in the near term. Chinas government is strongly dissatisfied with the move, but we have decided to play by the WTO rules and respond actively on this issue. We will fight to the end. Incidentally, the most recent comments underscore the potential for a trade war as Chinese officials have been rather quiet until now. The stricter stance is boosting speculation that revaluation is an unlikely scenario, helping to weaken the underlying currency. Now trading at 7.7269, the currency may be under further pressure heading into the London session.
With a dearth of data, the Hong Kong dollar was under pressure despite an advancing stock market. The USDHKD currency pair rose as high as 7.8174 in New York, breaking through key resistance at the 7.8150 figure. Hong Kong shares rose, led by major oil producers after crude oil contracts tested the $66 a barrel price. Companies like Cnooc Ltd. gained, with shares adding 2 cents to close at HK$6.82. PetroChina shares also gained on the day, rising 0.1 percent to HK$9.02. Countering overall market optimism, however, were exporters. With oil prices higher, concerns emerged over the likelihood that US consumption would deteriorate. As a result, Li & Fung, which sells goods directly to Wal-Mart stores, dipped 45 cents to close at HK$25.00. Notably, China Life stock resumed trading after yesterdays suspension. Shares were halted yesterday after it was revealed that the company plans to sell 19.9 percent of itself to Citigroup, according to the Hong Kong Economic Journal. Ultimately, the Hang Seng was able to add 16.23 points to close higher at 20,572.80.