The Australian dollar has edged lower Tuesday buying 72.30 US cents, down from 72.47 cents on Monday.

The local currency yesterday found some support as Asian markets steadied on hopes for progress on China-US tariffs at an anxiously awaited G20 meeting later in the week.

The Aussie dollar, often used as a liquid proxy for global trade prospects, edged up to 72.42 US cents on Monday and away from last week’s low at 72.02 US cents.

Both currencies remained hostage to a meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, in Argentina this week to see if the world’s biggest economies can de-escalate tensions over trade.

Trump has sounded slightly more conciliatory recently while heavy losses on Wall Street provide a home-grown reason to bolster market risk appetites.

“It has us believing that some form of handshake agreement could be reached whereby Trump agrees – for now – not to proceed with further tariff action,” NAB’s head of FX strategy Ray Attrill said.

“This is not a high conviction call, more like 60:40,” he added. “And even if we’re right, we suspect it will do no more than grant a temporary stay of execution to further trade action.”

Yet, any deal could elicit enough relief to lift the Aussie to 74.00 US cents in the short-term, said Attrill.

The lack of progress would likely be very bearish for the currency, particularly as worries over the Chinese economy have taken a heavy toll on iron ore and coal prices in recent days.

Futures for iron ore, Australia’s single biggest export earner, tumbled nearly six per cent on Monday as steel prices dropped to the lowest in almost five months.

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