AUD/USD gives up early gains as US Dollar rebounds after Trump-Xi meeting

• AUD/USD surrenders early gains as the US Dollar recovers from early losses.
• The US Dollar rebounds on improving trade relations between the US and China.
• Fed's Powell argues against reducing interest rates in the December meeting.

The AUD/USD pair gives back its early gains and ticks down to near 0.6570 during the European trading session on Thursday. The Aussie pair edges lower as the US Dollar (USD) recovers from early losses after the meeting between United States (US) President Donald Trump and Chinese leader Xi Jinping in South Korea.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades almost flat around 99.20.

After the meeting, US President Trump stated that meeting with Chinese leader Xi was "amazing" and Beijing has agreed to allow the export of rare earths to Washington "openly and freely". He added that tariffs on imports from China to the US have been reduced to 47% from 57%.

Improving US-China trade relations have boosted the appeal of the US Dollar.

Meanwhile, comments from Federal Reserve (Fed) Chair Jerome Powell that an interest rate cut in the December policy meeting are another major supportive factor for the US Dollar.

Broadly, receding US-China trade frictions are also favorable for the Australian Dollar, given that the Australian economy relies heavily on its exports to Beijing.

On the domestic front, traders doubt that the Reserve Bank of Australia (RBA) will cut interest rates again this year amid accelerating inflationary pressures. The Consumer Price Index (CPI) report showed on Wednesday that price pressures grew at a faster pace of 1.3% in the third quarter of the year, faster than estimates of 1.1% and the prior reading of 0.7%.