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The US State Department announced late Wednesday, Undersecretary for Economic Affairs Keith Krach is scheduled to visit Taiwan this Saturday for a memorial service for former Taiwanese President Lee Teng-hui.

The move, which is strongly opposed by China, as the US-Sino diplomatic ties remain sour over the Taiwan issue.

When asked about the possibility of a visit by Krach to Taipei earlier this week, China’s Foreign Ministry spokesman Wang Wenbin had said that they firmly oppose official exchanges between the US and Taiwan, and warned of serious damage to Sino-American relations.

Early Thursday, Reuters reported that the US is considering selling as many as seven major weapons systems to Taiwan. 

Market reaction

With the downbeat market mood following the Fed reiteration of no urgency to alter the monetary policy, the US-China tussle over Taiwan could likely bode ill for the risk/ higher-yielding assets.

AUD/USD is off the lows still trades 0.44% lower at 0.7275 while the S&P 500 futures tank 1% to 3,345.