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SYDNEY: The Australian and New Zealand dollars bounced on Monday as investors reconsidered the outcome for the U.S. presidential election following new polling, while looming central bank meetings should see a U.S. cut and domestic rates stay on hold.

The Aussie added 0.7% to reach $0.6603, nudging it away from last week’s low of $0.6534. It now faces stiff resistance at the $0.6627 200-day moving average.

The kiwi dollar firmed 0.% to $0.5997, just above its recent low of $0.5940. Resistance lies at $0.6000/6010.

Dealers said the gains reflected the findings of a new poll in Iowa showing Vice President Kamala Harris gaining an edge on Republican Donald Trump. The respected poll, which has been trending deeply Republican in recent years, showed Harris leading Trump 47%-44% in Iowa.

Betting site PredictIT also showed Harris at 54 to Trump on 53, compared to 42 to 61 just a week ago. In a race considered too close to call, wagers on betting sites have been scrutinized closely by financial markets.

Analysts assume Trump’s policies on immigration, tariffs and tax cuts would put a lot more upward pressure on the U.S. dollar and yields, than a Harris victory.

Australian dollar stuck near three-month lows on mixed inflation data

Trump’s tariffs, if enacted, might also lead to a global trade war which would likely be damaging to the Antipodeans who reply heavily on free trade.

“The Aussie remains a favourite “whipping boy” for markets such that the knee-jerk response to a Trump win would be negative, and positive on a clear Harris victory,” said Rodrigo Catril, a senior FX strategist at NAB.

He added it would likely take evidence of stimulus measures in China actually bearing fruit to see the Aussie rally in a sustainable fashion.

China’s National People’s Congress is meeting all week and markets are wagering a sizable fiscal package will be announced on Friday.

At home, the Reserve Bank of Australia (RBA) meets on Tuesday and is considered certain to keep rates at 4.35%, where they have been since a hike a year ago.

Investors will be sensitive to any tweaks to the statement, particularly on policy needing to be “sufficiently restrictive” and the RBA not “ruling anything in or out” on rates.

“The further down the disinflation path we travel, and the longer the disinflation remains on track, the harder this language is to justify,” said Westpac chief economist Luci Ellis.

“Absent a major shock, we do not see the economy hitting a wall in the next few months enough to shift the RBA’s thinking on rate cuts,” she added. “If things turn out weaker over the next couple of quarters, a faster trajectory for the rate-cutting phase could occur, but a start date earlier than February seems like a low-probability outcome.”

Markets imply just a 20% chance of an easing in December and only 44% for February.

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