The Australian dollar climbed to around $0.651 on Monday, extending its upward momentum from last week amid renewed optimism over high-level trade discussions between the United States and China.

Investor sentiment brightened after President Donald Trump confirmed that trade officials from both sides would meet in London later today. Treasury Secretary Scott Bessent is expected to lead the U.S. delegation, while Vice Premier He Lifeng will represent China. Although no specific breakthroughs have been promised, markets welcomed the development as a sign of potential de-escalation in trade tensions.

The talks come at a delicate time for both economies. China is grappling with deflationary pressures and weakening demand, while the U.S. continues to face uncertainty from shifting trade policies. Analysts say a constructive outcome from the talks could help stabilize global economic conditions and support risk assets like the Australian dollar.

Back home, pressure is mounting on the Reserve Bank of Australia to take more aggressive action to support growth. A prominent local economist has urged the central bank to consider a bold 35 basis-point rate cut at its upcoming July meeting, surpassing the more conventional 25 bps cuts delivered in February and May.

Sluggish GDP growth and persistently weak consumer spending are being cited as key factors holding back the private sector recovery. With inflation easing and global risks remaining high, analysts argue that the RBA has room—and reason—to act decisively.

Market participants will now look ahead to upcoming inflation data and any forward guidance from the RBA that could hint at the likelihood of further monetary easing.