• Hopes for a trade deal between the United States and China may offer mild support to the Aussie.
• Traders await the US CPI release later in the day, which could influence the Fed’s policy outlook.
• Investors look ahead to the speech by RBA Governor Michele Bullock on Monday for fresh guidance.

AUD/USD retreats on Friday, trading around 0.6500 at the time of writing, down 0.25% for the day, despite a generally more constructive tone on the trade front between China and the United States (US). Investors remain cautious ahead of the release of the US Consumer Price Index (CPI) later in the day, and the anticipated speech by Reserve Bank of Australia (RBA) Governor Michele Bullock on Monday.

Signs of easing trade tensions between Washington and Beijing may provide some mild support to the Australian Dollar (AUD), which is often viewed as a proxy for China. The two powers are set to begin a fifth round of high-level talks in Malaysia on Friday, gathering Chinese Vice Premier He Lifeng, US Treasury Secretary Scott Bessent, and Trade Representative Jamieson Greer.

Markets are hoping for tangible progress ahead of the meeting between US President Donald Trump and Chinese President Xi Jinping, scheduled for next Thursday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. Discussions could range from the resumption of soybean purchases by China to nuclear arms control issues.

Attention now turns to the release of the US CPI for September, expected to show a 3.1% annual increase, up from 2.9% in August. The core CPI, which excludes food and energy, is also projected to rise by 3.1% YoY. A stronger-than-expected reading could revive fears of tariff-driven inflation and temporarily support the US Dollar (USD), lowering prospects of a 25-basis-point rate cut by the Federal Reserve (Fed) in December, while a softer outcome would reinforce them.

In this context, volatility in AUD/USD remains limited as investors await new macroeconomic catalysts to guide their positions.