USD/CNH Drifts Higher, US-China Tensions In Focus After Tsai-McCarthy Meeting

(MNI Australia) USD/CNH spent most of the post Asia Wednesday close tracking higher (apart from a brief dip below 6.8700). We finished the session just above 6.8850, which is close to highs for Wednesday. We remain within recent ranges, as has been the case this week. Higher USD index levels aided the USD/CNH move, but the CNY NEER was a touch firmer, now back to 124.89 (J.P. Morgan Index).

• China markets return from yesterday's holiday today. On the data front, we have the Caixin services PMI on tap for March. The market consensus is for a 55.0 outcome, same as February. The composite index is also due, prior was 54.2, with no consensus estimate for this print.
• The other focus point will be Taiwan President Tsai's meeting with US House speaker McCarthy. Headlines have already crossed from China's foreign ministry condemning the meeting and stating the Taiwan issue is an 'uncrossable' red line.
• Further rhetoric/actions will in focus today and over coming sessions. The Taiwan military has reportedly spotted a Chinese aircraft carrier near its waters ahead of the meeting.
• Finally, in the equity space, the Golden Dragon index lost 2.7% in US trade for Wednesday. The index (last at 6958) is back close to its simple 200-day MA.