The Australian dollar strengthened to above $0.662 on Thursday, extending its five-session rally to its highest level since November 2024, fueled by optimism over latest global trade developments. The US and EU are reportedly nearing a trade deal imposing 15% tariffs on most imports, while Treasury Secretary Scott Bessent also confirmed upcoming US–China talks in Stockholm. These progress followed a recent US–Japan tariff deal that helped ease global trade tensions. Adding to momentum, latest data showed Australia's business activity grew at its fastest pace in July, as manufacturing output rose for the first time in three months and services expanded sharply, driven by strong new orders and ongoing hiring. On the policy front, RBA Governor Michele Bullock said a “measured and gradual” approach to rate cuts is appropriate, citing strong labor demand and easing core inflation. Markets, however, are fully pricing in a 25bps cut in August, with rates seen bottoming at 3.10% by year-end.