US and Chinese officials have commenced high-level discussions in New York, aiming to pave the way for potential agreements on trade, Artificial Intelligence (AI), and critical minerals ahead of a scheduled meeting between US President Donald Trump and Chinese President Xi Jinping later on Thursday [1]. The talks are being led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng at JPMorgan Chase’s Manhattan headquarters, with US Trade Representative Jamieson Greer also participating [1]. The summit between Trump and Xi is set to take place in Washington this Thursday and is expected to focus on the US–China tariff truce, an event closely monitored by financial markets [2].
In parallel, the Australian Dollar (AUD) has edged lower against the US Dollar (USD), with the AUD/USD pair trading around 0.7120, down 0.04% on the day during the early Asian session on Monday [1][2]. This movement follows the US Federal Reserve’s decision to raise interest rates by 25 basis points last week, marking its first hike in three years as it seeks to address persistent inflation [2]. Fed Chair Kevin Warsh stated, “the plain fact is that inflation is too high and has been for too long,” and emphasized that recent inflation readings have not shown meaningful improvement [2]. Market expectations for another US rate hike at the Fed’s next meeting in October have increased to nearly 56.5%, up from 42.5% a week ago, according to the CME FedWatch tool [2].
Looking ahead, traders are awaiting the Australian jobs report due later on Thursday. Projections indicate that the Unemployment Rate will remain unchanged at 4.5% in August, with employment expected to rise by 20,000 [2]. Any positive surprise in the Australian labor market could provide near-term support for the AUD [2].
Strategists at UOB Group maintain a cautious outlook on AUD/USD, noting that while further weakness is possible, a close below 0.7100 would be required to target 0.7050. They highlight 0.7140 as a key resistance level, with a breach signaling stabilization in the recent decline [2]. Meanwhile, Fed officials, including Schmid, have reinforced a hawkish stance, citing inflation above 3% and broad-based price pressures, which has contributed to a firmer USD and weighed on the AUD [2].
CONCLUSION
High-level US-China talks and the upcoming Trump-Xi summit are drawing significant market attention, particularly as the US Federal Reserve’s hawkish policy stance pressures the Australian Dollar. With the AUD/USD pair trading lower and expectations for further US rate hikes rising, upcoming Australian labor data and the outcome of the US-China summit will be key drivers for market sentiment in the near term.