AUD/USD extends four-day winning streak, focus shifts to US-China trade talks
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AUD/USD advances to near 0.6580 as the Australian Dollar trades firmly.
Investors eye US-China trade talks that are scheduled for next week.
The RBA is expected to cut interest rates in the near term.
The AUD/USD pair extends its winning streak for the fourth trading day on Wednesday. The Aussie pair jumps to near 0.6580 as the Australian Dollar (AUD) outperforms across the board amid a cheerful market mood.
The risk-appetite of investors has increased as the United States (US) has confirmed a trade deal with Japan, with concessions on baseline and automobile tariffs. Trump stated through a post on Truth.Social on Tuesday that a deal with Tokyo has been confirmed and announced a reduction in the baseline tariff to 15% from 25% stated in the letter sent to Japan at the start of the week. According to a report from NHK, Japanese automakers will face 15% tariffs on exports to the US, lower than 25% that is applicable for all imports foreign cars and auto-components.
Meanwhile, investors await trade talks between Washington and Beijing scheduled for next week. Given that the Australian economy relies heavily on its exports to China, an improvement in Beijing’s business outlook bodes well for the Australian Dollar.
On Tuesday, US Treasury Secretary Scott Bessent confirmed that officials from Washington and Beijing will meet next week in Stockholm to rebalance the US-China trade relationship, Reuters reported.
On the domestic front, dovish Reserve Bank of Australia (RBA) minutes of the policy meeting that took place earlier this month have signaled that officials are comfortable with interest rate cuts in the near term.
Meanwhile, the US Dollar (USD) trades cautiously near its two-week low even as the US-Japan trade agreement has been confirmed. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, seems vulnerable near 97.40.
Going forward, investors will focus on preliminary Australian and US PMI data for July, which is scheduled to release on Thursday.
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