US-China tensions resurface over Taiwan

China's Taiwan Affairs Office threatened retaliation over Taiwan President Tsai Ing-wen's visit to the US on Wednesday. 

Zhu Fenglian, spokesperson of China's Taiwan Affairs Office said at a news conference, “if she contacts US House Speaker McCarthy, it will be another provocation that seriously violates the one-China principle, harms China's sovereignty and territorial integrity, and destroys peace and stability in the Taiwan Strait. We firmly oppose this and will definitely take measures to resolutely fight back."

In response, Reuters cited senior US officials, as saying that “China shouldn't overreact to Taiwan president's transit.”

Additional comments

“Taiwan president's planned transit is consistent with long-standing US practice.”

“Urgs China to keep open channels of communication.”

“See no reason for Beijing to overreact.

“China's attempts to alter Taiwan's status quo will not pressure the US to change this.”

Market reaction

Amid renewed US-Sino tensions, further recovery in the AUD/USD pair appears elusive, The pair is trading at around 0.6700, down 0.16% on the day.

The high beta currency, AUD/USD, hit daily lows of 0.6688 after the Australian monthly Consumer Price Index (CPI) data disappointed and boosted expectations of a Reserve Bank of Australia (RBA) rate hike pause next Tuesday.