The Australian dollar (AUD) continued to strengthen against the US dollar (USD) for the second straight session on Monday (5/12). The AUD/USD pair benefited from growing optimism surrounding the US-China trade talks being held in Geneva. As Australia maintains strong economic ties with China, developments in the Chinese economy often have a direct impact on the AUD.

After two days of negotiations aimed at easing trade tensions, both the US and China reported "substantial progress." Chinese Vice Premier He Lifeng described the talks as an "important first step" toward stabilizing bilateral relations. Meanwhile, US Treasury Secretary Bessent and Trade Representative Greer called the discussions a constructive step toward narrowing the $400 billion trade imbalance.

Adding to the focus on China, President Xi Jinping will speak at the opening ceremony of the fourth China-CELAC Forum ministerial meeting in Beijing on May 13.

Looking ahead, traders will be watching key Australian economic releases, including Westpac Consumer Confidence for May and NAB Business Conditions for April, both due on Tuesday, which could provide fresh cues for the AUD. Investors are also focused on upcoming US data, with consumer inflation figures due on Tuesday, followed by Retail Sales and Producer Price Index data on Thursday, as they gauge the initial impact of the trade dispute on the broader economy. (Newsmaker23)

Source: FXstreet