The negotiations, scheduled to run through Friday, follow three days of deputy-level meetings to work out technical details, including a mechanism for enforcing any trade agreement.

The Australian dollar was last up 0.3 percent at $0.7109 after hitting a more than one-month trough of $0.7054 earlier this week.

The currency, which is also used as a liquid proxy for Chinese growth, briefly ticked up 10 pips to as high as $0.7113 after data from China came in stronger than forecast.

China's January dollar-denominated exports rose 9.1 percent from a year earlier, while imports dropped 1.5 percent when analysts had expected both to fall for a second straight month.

The Aussie had lost almost 2.5 percent just in the past two weeks as investors narrowed the odds of policy easing after Australia's central bank signalled rates could move lower, if needed.

Nick Twidale, Sydney-based analyst at Rakuten Securities Australia, said now "all eyes move to Beijing", given the trade talks.

"Investors are once again cautiously optimistic that progress will be made and realistically an extension of the tariff deadline will be seen as a good result in the short term and should spur momentum to the topside," Twidale added.

"Only evidence of a solid deal going forward will dispel the investor caution and global growth fears that have been such a feature of the trading environment over the last year."

The New Zealand dollar extended gains to $0.6822 as investors saw a smaller probability of any rate cuts after the country's central bank downplayed expectations for a future easing at its Wednesday meeting.

Expectations for a dovish signal were rife after a similar move by the Reserve Bank of Australia (RBA) just the previous week.

Against the Aussie, the kiwi dollar was hovering near a six-week top of A$0.9616.

"The RBNZ's neutral stance was in stark contrast to last week's more dovish comments by the RBA's Governor and explains why the New Zealand dollar appreciated against the Australian dollar," Capital Economics wrote in a note.

It cited two factors for the kiwi outperformance against the greenback - better terms of trade, as the price of New Zealand's key export milk has rallied strongly since November, and relative insulation from slower growth in Europe and China.

New Zealand government bonds fell, sending yields about 4 basis points higher across the curve.

Australian government bond futures were slightly firmer, with the three-year bond contract up half a tick at 98.325. The 10-year contract rose 1.5 ticks to 97.865.