Senior US official warns China over Australian trade conflict

The US will support Australia and will not offer any improvements in the relationship with China until Beijing stops its economic coercion of the OZ nation, President Joe Biden’s Indo-Pacific Coordinator, Kurt Campbell, said in an interview with The Sydney Morning Herald and The Age.

Key quotes

“We are not going to leave Australia alone on the field.”

“We have made clear that the US is not prepared to improve relations in a bilateral and separate context at the same time that a close and dear ally is being subjected to a form of economic coercion.” 

“President Biden was very direct with Prime Minister Morrison that we stood together on this.” 

“So we’ve indicated both to Australia and China at the highest levels that we are fully aware of what’s going on and we are not prepared to take substantial steps to improve relations until those policies are addressed and a more normal interplay between Canberra and Beijing is established.”

Market implications

The above comments likely add to the cautious market mood, as AUD/USD trades on the defensive around 0.7750. The US dollar index holds onto the recent advance heading into the two-day FOMC meeting starting later on Tuesday.  

The Asian equities are tracking the rally in Wall Street indices while the S&P 500 futures tread water.