- The Aussie dollar spiked towards US73 cents today after Scott Morrison won the Liberal Party’s leadership spill.
- ANZ currency strategist Daniel Been told Business Insider that the market reacted to increased certainty following the result.
- However, Been said global factors could soon see the Aussie re-test last week’s low of around US72 cents.
The Aussie dollar just rocketed higher after Scott Morrison won leadership of the Liberal Party in a party-room ballot.
After falling below 0.7250 US cents earlier this morning, the Aussie shot back above 0.7270 US cents.
Here’s the move:
ANZ’s Head of FX Research, Daniel Been, told Business Insider the move was clearly related to leadership vote. However, he doesn’t expect it to last.
“Markets were relieved that the uncertainty has now passed,” Been said.
“We do not think that it will sustain however, as we think global factors are going to return to focus — and on that front the outlook is not good.”
Been pointed to the meeting of central bankers in Jackson Hole, Wyoming — where US Fed Chair Jerome Powell is scheduled to make a speech tonight — as one factor which could weigh on the Aussie near-term.
“We think that Powell will be more hawkish that the market is anticipating,” Been said.
Combined with no obvious progress in US-China trade negotiations, Powell’s comments are likely to “drive a full reversal of the USD weakness seen over the past week”.
“This will see the AUD re-testing its lows from last week,” Been said, when it almost fell below US72 cents.
You can follow all the live action surrounding today’s leadership spill live on Business Insider here.
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