Australian dollar offers a clue on what's helping to drive market sentiment today

<p>AUD/USD is tracking back towards the highs of the day as US equities near the best levels of the day.</p><p>This pair (and NZD) is leading the rally against the US dollar for the second day and I think that's telling. AUD is often driven by China sentiment and today, Chinese President Xi Jinping is in San Francisco and meeting with US President Biden. The meetings represent a dialing-down of trade tensions between the rivals.</p><p>Looking at China ADRs, the KWEB China tech ETF is up 4.7% today and at a session high and challenging the October top.</p><p>Chinese data overnight was also decent with industrial output and retail sales both slightly above estimates. </p><p>While I think Fed expectations have gone too far with pricing in an 80% chance of a May 1 cut, there's plenty of room for China valuations to recover if there's a crest in trade tensions.</p>

This article was written by Adam Button at www.forexlive.com.