US President Joe Biden and his Chinese counterpart Xi Jinping are scheduled to have a call on Thursday, their first conversation in four months, Associated Press (AP) reports, citing a US official.

The planned talks come ahead of a visit to Taiwan by House Speaker Nancy Pelosi in August, which has reignited tensions between Washington and Beijing over Taiwan.

“The talks between Biden and Xi could also include discussion of North Korea's nuclear program, differences between Beijing and Washington over Russia's war in Ukraine, efforts by the Biden administration to revive the Iran nuclear deal and the status of the US administration's review of tough tariffs imposed on China by the Trump administration,” AP reported.

John Kirby, a national security spokesperson for the White House, said Tuesday. "There are issues of tension in this relationship. But there are also issues where we believe cooperation is not only possible, but mandatory, for instance on climate change, which affects us greatly."

Market reaction

Risk sentiment remains tepid, despite the uptick in the S&P 500 futures, as anxiety ahead of the Xi-Biden meeting and the Fed decision dominate.

At the time of writing, AUD/USD is trading under heavy selling pressure around 0.6920, as aggressive RBA tightening bets ease after the Australian Q2 inflation data fail to impress.