Australian dollar has been the most volatile currency in the Asian trading session. After it became clear over the weekend that the parliamentary elections would not result in a clear majority for the four-party coalition on the one hand or the Labor party on the other, the Aussie initially came under considerable pressure during Asian market opening.
AUD-USD fell from closing levels around 0.7500 to levels below 0.7450. However, the weakness proved short-lived. The pair recovered and was trading above the 0.75 handle at around 08:50 GMT. The Australian dollar is benefitting from the relief rally in risk assets following the Brexit vote as fears that it would trigger a sharper slowdown in global growth have not materialized.
The Liberal-National coalition leads in 66 seats compared to 72 seats for the Labour Party with both falling short of the 76 seats required to hold a majority in the lower house. Vote count will resume on Tuesday when the final results are expected. According to Bloomberg, postal votes may decide as many as 12 unclear seats.
“We do not expect the performance of Australian dollar beyond the very near-term to be driven by domestic political developments. In these circumstances, we do not expect the RBA to strongly signal after their policy meeting on Tuesday that it is considering further easing,” said MUFG in a report.
The material has been provided by InstaForex Company – www.instaforex.com