The Australian dollar has continued its rebound to a three-week high of 72.6 US cents, despite an increase in US interest rates, and also gained against other major currencies.
It has risen to 55.2 British pence, 62.2 euro cents and 81.5 Japanese yen.
It seems global investors are betting that the US-China trade war will not be as bad as they initially feared.
After all, both sides are essentially "pulling their punches", as the tariffs imposed by Washington and Beijing on each other were less severe than they had previously warned.
Last week, the local currency dipped below 71 US cents, a two-and-a-half-year low over simmering US-China trade tensions.
NAB currency strategist Rodrigo Catril said the local currency was boosted by an "improvement in emerging market sentiment", along with comments made by Li Keqiang, the Premier of China on Wednesday.
Mr Li stressed that China would not deliberately weaken its own currency to boost its exports, in his address to a World Economic Forum event in Tianjin.
"Some people think China deliberately [devalued the yuan]; this is groundless," he said.
"One-way depreciation of the yuan brings more harm than benefits for China."
The Chinese Premier's comments lifted the yuan against the US greenback, though it has fallen by 9 per cent since April.
Stock market reaction
Australian shares are expected to start the day with very little momentum, with ASX futures trading flat.
European markets ended their day stronger — with London (+0.4pc), Frankfurt (+0.5pc) and Paris (+0.6pc) posting moderate gains.
Stock markets in Asia were the best performers, with Tokyo, Shanghai and Hong Kong jumping by at least 1.1 per cent each.
Wall Street closed with a mixed, but mostly higher, result.
The benchmark S&P 500 index rose 0.1 per cent to 2,908. The industrial-skewed Dow Jones gained 159 points, or 0.6 per cent, to 26,406.
The two indices were driven higher by a surge banking and financial stocks — which received a boost from rising market interest rates.
The 10-year US treasury yield rose to a four-month high of 3.07 per cent. The two-year yield climbed to 2.8 per cent, its highest level in a decade.
However, the tech-heavy Nasdaq index slipped by 0.1 per cent, after a fall in big-name stocks like Amazon (-0.8pc), Netflix (-0.2pc) and Microsoft (-1.3pc).
