China threatens retaliation over Taiwan President's US visit

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China threatens retaliation over Taiwan President's US visit

China's Taiwan Affairs Office issued a warning of retaliation over Taiwan President Tsai Ing-wen's visit to the US on Wednesday. China's spokesperson, Zhu Fenglian, stated at a news conference that “if she contacts US House Speaker McCarthy, it will be another provocation that seriously violates the one-China principle." The visit by the Taiwan President has sparked tensions with China, who claims sovereignty over Taiwan.

In response to China's warning, senior US officials urged China not to overreact to the transit of the Taiwan president. The US officials stated that the planned transit is consistent with the long-standing US practice, and China's attempts to alter Taiwan's status quo will not pressure the US to change this.

The market reaction to the renewed US-Sino tensions is that the Australian dollar's recovery appears to be unlikely. The AUD/USD pair is currently trading at around 0.6700, down 0.16% on the day. The currency 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.

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