China is urging the US not to disturb regional stability
- China is urging the US not to disturb regional stability.
- China firmly opposes the US statement on South China Sea.
China's pursuit of offshore resources in parts of the South China Sea is "completely unlawful", US Secretary of State Mike Pompeo has said.
Mr Pompeo said that Beijing's "campaign of bullying to control" the disputed waters was wrong.
The BBC reported that China claims a large part of the region, and has been building military bases on artificial islands there.
The countries have wrangled over territory in the South China Sea for centuries, but tension has steadily increased in recent years.
Beijing claims an area known as the "nine-dash line" and has backed its claim with island-building and patrols, expanding its military presence there.
Although largely uninhabited, two island chains in the area may have reserves of natural resources.
Market implications
The market is keeping a close eye on the war of words between the two nations.
At the same time, this week will be crucial for stocks with bank earnings that kick off today for which much of FX is correlated to currently.
AUD is a proxy to the wear of words and is also trading in tandem to the US benchmarks performances.
More on that here:
- AUD/USD is moving into negative territory as well-off in US equities continue
- S&P 500 Index Forecast: Bank's earnings in focus, COVID-19 induced insolvency fears simmer away