Insights 
VT 
The Australian dollar has risen by 30 pips to reach 0.6521, just 17 pips away from last week’s peak. Breaking this level could push AUD/USD to its highest point since November.
An area of focus involves the US-China trade talks and their potential impact on global growth. The AUD/USD remains within the trading range established since September, with potential movement in either direction based on future developments.
Gradual Progress In Trade Talks
Progress may be gradual in the trade talks, with no immediate or definitive outcomes. A consistent upward trend since January is visible in the daily chart, despite some disruptions.
Supporting the upward momentum is the current state of US and international stock indexes, which face little resistance as they approach historic highs. These indexes are trading at favourable levels, aiding the Australian dollar’s rise.
Financial markets appear to be leaning towards a more risk-on sentiment, as suggested by the Australian dollar’s recent strength. With AUD/USD testing levels not seen since late last year, we can take this as confirmation that market participants are seeing value in pro-growth currencies under the current circumstances.
What has happened so far is straightforward. The currency moved higher by 30 basis points, brushing against near-term highs that had been defined a week ago. This took it within a whisker of its strongest level since November. During this period, the exchange rate has kept within a fairly narrow corridor—boxed in since September—which reflects a market with limited conviction but holding potential to break, should external variables firm in one particular direction.
Supports For The Australian Dollar
That direction, as it stands, leans upwards, though confirmation is pending. What supports this rise isn’t just speculation or fickle flows—stock market indicators serve as a tangible base. US equity benchmarks, alongside their counterparts in overseas markets, have been pressing against overhead levels that, in most cases, haven’t been touched for months. When these benchmarks gain ground without facing much downward pressure, commodity-driven currencies like this one benefit from the perception of a healthy global economy, or at least one trending upward for now.
More broadly, the messaging coming out of the continued negotiations between the United States and China isn’t offering any clear breakthroughs, but the market is not punishing that just yet. There’s a recognition that any resolution will take time, and in the meantime, the lack of overt deterioration in tone is being treated as mildly supportive by currency traders. This cautious positivity is filtering through risk assets more broadly and pushing the Australian dollar to the upper end of its defined range.
For those of us watching the derivatives side, the implications are quite concrete. The underlying trend on the daily chart, which has sustained modest but persistent upward bias since early in the year, gives reason to view any retracement with scepticism—at least while current equity price action stays constructive. What this means in practice is that premium pricing for downside protection may remain softer than usual, and short volatility strategies might continue to attract attention so long as implieds stay above realised benchmarks.
We shouldn’t dismiss how technicals are behaving here, either. If the pair clears last week’s high with conviction, the next run could be swift, especially if volume confirms the move. At this stage, standing aside is a choice that carries as much risk as active positioning, since topside acceleration is a possibility in such technically sensitive regions. Markets don’t wait for certainty—they wait for confirmation, and the next test could provide just that.
One final observation: gaps in macro event flow from the Australian and Chinese calendars leave the pair, for the time being, more subject to external sentiment than domestic triggers. This puts control with equity and rates traders, whose appetite—or lack thereof—may shape the path forward more than trade negotiators in coming sessions.
