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By xemarketanalysis November 21, 2017 1:52 pm
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    XE Market Analysis: Aussie Dollar Bounces on RBA Comments


    • UK government borrowing slightly higher than expected.
    • The Euro remains under pressure from German political situation.
    • US home sales increased more than expected in October.


    The Australian Dollar hit a fresh 5-month low overnight after the minutes from the central bank's last meeting warned of "considerable uncertainty" about how quickly wage growth and inflation might pick up, cementing expectations that interest rates will be on hold for some time to come. However, a speech by RBA Governor, Philip Lowe, sounded cautiously upbeat and he dampened any bets that rates could be cut below their current record low of 1.5%.


    The US Dollar is broadly flat and remains within well-established ranges in quiet trade ahead of Thanksgiving. 


    The Pound edged higher against both the Dollar and the Euro in early morning trade as Brexit headlines remained positive around the financial settlement but have struggled to hold the gains. Political uncertainty in Germany could delay Brexit progress, and this looks to be making traders cautious about any rallies in the Pound. 


    The Euro is generally lower across the board as the latest headlines from Germany indicate a high probability of a snap election. Chancellor Angela Merkel said she would prefer a new election to ruling with a minority government. 


    The Loonie is soft and down 0.4% adding to yesterday's losses, with the outlook for relative central bank monetary policy appearing to likely be the trigger. Markets have reduced expectations for a 0.25% rate hike in Canada to below 50%, while they attach a 90% probability for a US rate hike next month.


    The Aussie Dollar recovered from a fresh 5-month low after the RBA Governors speech (see highlight).


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