The Australian Dollar (AUD) is trading slightly higher against the US Dollar (USD) on Monday, with the AUD/USD pair hovering around 0.6500 during the Asian session. The modest uptick comes as optimism grows over easing trade frictions between the United States and China.
Investor sentiment improved following remarks from US President Donald Trump, who told Fox Business that current high tariffs are “not sustainable, though it could stand.” Trump confirmed that his planned meeting with Chinese President Xi Jinping in South Korea later this month is still on schedule, fueling hopes of progress in trade discussions.
Recent tensions between Washington and Beijing escalated after China imposed export restrictions on rare earth minerals, prompting the US to respond with 100% tariffs on Chinese imports. However, the latest signs of diplomatic engagement have tempered fears of a prolonged trade standoff—an encouraging development for the Australian Dollar, which is often seen as a proxy for China-related economic sentiment due to Australia’s significant export exposure to the Chinese market.
Meanwhile, the US Dollar remains subdued at the start of the week as investors await the release of the delayed September Consumer Price Index (CPI) data. The inflation report, due later this week, is expected to play a key role in shaping market expectations for the Federal Reserve’s upcoming policy decision.
According to the CME FedWatch tool, markets have fully priced in a 25-basis-point rate cut at the Fed’s October meeting, reinforcing a dovish outlook that continues to weigh on the greenback.
