The Australian Dollar edges lower toward 0.7250 as markets closely monitor potential talks between Trump and Xi.

• AUD/USD eases to near 0.7250 during Thursday’s Asian trading session.
• US producer inflation unexpectedly posted its sharpest increase in four years.
• Donald Trump is set to meet with Xi Jinping in China for a closely watched high-level discussion.

The AUD/USD pair declines toward 0.7250 during Thursday’s Asian session as stronger-than-expected US inflation figures lend support to the US Dollar against the Australian Dollar. Investors are also keeping a close eye on the summit between US President Donald Trump and Chinese President Xi Jinping in Beijing, along with the upcoming release of US April Retail Sales data later in the day.

US producer inflation recorded its strongest annual increase in four years in April, reinforcing demand for the Greenback. According to data published by the US Bureau of Labor Statistics on Wednesday, the Producer Price Index (PPI) climbed 6.0% year-over-year, up from 4.3% previously. On a monthly basis, PPI advanced 1.4% in April after rising 0.7% in March, significantly exceeding market expectations of 0.5%.

Market participants are now turning their attention to Thursday’s US Retail Sales report. Economists forecast retail sales growth of 0.5% month-over-month in April, following a 1.7% increase in March. Stronger-than-anticipated data could further strengthen the US Dollar and weigh on the AUD/USD pair.

Meanwhile, Bloomberg reported Wednesday that Trump arrived in Beijing for an official state visit, where he is expected to meet Xi Jinping to discuss trade relations and the conflict involving Iran. The trip marks the first state visit to China by a US president in nearly a decade. Any constructive outcomes from the US-China discussions may support the Australian Dollar, given Australia’s close trade ties with China.