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  • The Australian dollar is trading the green vs the US dollar as we approach the final hour on Wall Street. 
  • AUD/USD is up some 0.33% having travelled between a low of 0.7507 and a high of 0.7571. 

Global markets focused on Brexit talks and the US aid package discussions.

Both are providing a degree of longer-term optimism as there appears to be some headway in recent discussions on both fronts.

This has lifted spirits and buoyed the higher-beta currencies, such as the Aussie, and weighed on the greenback:

DXY daily chart

Meanwhile, there remain two sticking points to get bipartisan agreement on the US fiscal package which are there liability protection for employers and aid for state and local governments.

Congress is expected to vote on the deal when they meet on Wednesday. 

Domestically, the Reserve Bank of Australia minutes were in line with market expectations and did not offer any surprises given the recent positive data releases.

The minutes, however, also noted that China’s import bans and other obstacles to imports of some Australian products, particularly agricultural products and, more recently, coal, had affected Australian trade.

Nonetheless, Chinese demand for Australian iron ore exports remained firm and prices are supportive, higher by some 0.7% on the day in the front-month futures contract. 

On the other hand, despite the stronger-than-expected employment outcomes in October, members also expressed concerns on the significant amount of spare capacity in the labour market.

Overall, the Board reaffirmed the policy settings for the next six months with the cash rate at 0.1%, the expanded Term Funding Facility (TFF) and the RBA’s A$100b QE program.

For the week ahead, the Federal Reserve is going to be key.

”Our base case sees further downside risks for USD, but its downtrend is now increasingly mature. Stretched positioning & valuation considerations may ultimately be a limiting factor on a dovish outcome,” analysts at TD Securities argued. 

The analysts are also watching Aussie November employment numbers, ”where we expect headline employment to increase above consensus (TD: +50k, cons: +40k).”