“China has declined a US request for a phone call between U.S. Defense Secretary Lloyd Austin and Chinese Defense Minister Wei Fenghe,” a Pentagon spokesman said on Tuesday reported Reuters.

Brigadier General Patrick Ryder also stated, per Reuters, “The Pentagon submitted the request for a secure call on Saturday, immediately after shooting down a suspected Chinese surveillance balloon off the coast of South Carolina.”

"Unfortunately, the PRC (People’s Republic of China) has declined our request. Our commitment to open lines of communication will continue," Ryder added.

On the same line was news from Reuters saying, “The US Coast Guard on Monday imposed a temporary security zone in waters off South Carolina during the military's search for debris from a suspected Chinese spy balloon shot down by a US fighter jet, and the White House said it would keep a calm approach to relations with Beijing.”

Market implications

Following the news, AUD/USD retreats from 0.6960 while paring the Reserve Bank of Australia (RBA) inspired gains, last seen around 0.6950 during early Wednesday morning in Asia.

Also read: AUD/USD Price Analysis: Bulls at the ready for a test of 0.7020