Trump told reporters Thursday that he was "close" to doing something on trade with China but added he wasn't sure if he wanted to do it. "Because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes, so I really don't know," he said.
Meanwhile, reports said that White House advisor Peter Navarro would be attending the dinner between Trump and Xi. News of his attendance dampened hopes that a trade deal could be hatched at the meeting given his longstanding hawkish tone on U.S.-China trade.
Elsewhere, the Wall Street Journal reported that officials from both governments said the U.S. and China are exploring a trade pact that would halt further tariffs from Washington in exchange for new talks looking at major changes to Beijing's economic policies.
Analysts said that a more conciliatory tone between the two leaders could see risk assets respond positively. But some warned that the trade dispute will not go away just because of the meeting.
"Though a comprehensive agreement is still unlikely, agreeing a framework of future talks together with delay in implementation of 25 (percent) tariffs hike on $200 (billion) of Chinese imports are sufficient to constitute a good outcome," Huani Zhu, an economist at Mizuho Bank, said in a note.
In the currency market, the dollar traded at 96.77 against a basket of its peers Friday afternoon during Asian hours. The dollar index fell from levels above 97.200 following remarks from the Fed Chair earlier this week which some market watchers took to mean the central bank may stop hiking rates sooner than it had previously signaled.
The yen traded at 113.37 to the greenback, while the Australian dollar fetched $0.7318.
Elsewhere, reports said that the Pakistani rupee plunged about 6 percent in what was suspected to be the sixth currency devaluation by the country's central bank in the past 12 months.
— Reuters contributed to this report.