- The Australian dollar gave back earlier gains to close Monday’s session flat.
- Sentiment towards Italian politics, at a time when US and UK markets were closed, drove boarder price movements during the session.
- Second-tier data releases dominate the economic calendar today, hinting that geopolitics will continue to dominate.
The Australian dollar travelled far and wide on Monday but ended up going nowhere, giving back earlier gains to finish flat.
Here’s the scoreboard as at 7am in Sydney.
AUD/USD 0.7545 , -0.0003 , -0.04%
AUD/JPY 82.55 , 0.00 , 0.00%
AUD/CNH 4.8261 , 0.0042 , 0.09%
AUD/EUR 0.6490 , 0.0013 , 0.20%
AUD/GBP 0.5667 , -0.0001 , -0.02%
AUD/NZD 1.0864 , -0.0031 , -0.28%
AUD/CAD 0.9801 , 0.0008 , 0.08%
With no major economic data to go off, the Aussie’s movements largely replicated those in the euro with initial optimism over the inability for Italy’s Five Star Movement and League to form government quickly replaced by renewed concern that these anti-establishment parties could get an even firmer grip on power should new elections be held.
“Italian President Mattarella appointed Carlo Cottarelli, an economist and former IMF official, to run a technocratic government after the anti-establishment coalition dropped their bid to form a government,” said Elias Haddad, Senior Currency Strategist at the Commonwealth Bank.
Haddad says Cottarelli will now have to build a cabinet and face confidence votes in both houses of parliament, something that appears unlikely to succeed.
“Most political parties have already said they plan to vote against Cottarelli’s prospective government,” he says. “Consequently, a new Italian general election is expected to be held in September.”
The renewed political uncertainty in Italy, even more than usual standards, saw risk assets give back early gains to largely finish lower.
Contributing to the whippy price action seen during the session, US and UK markets were off enjoying a long weekend, meaning volumes were also well down on normal.
The story of Monday’s session is seen perfectly in the AUD/USD 5-minute chart below.
Turning to the session ahead, geopolitics, yet again, appears likely to drive broader market movements.
There very little on the economic calendar in Asia — Japanese unemployment data is the highlight — with that trend extending into both European and North American trade with nothing but second-tier releases scheduled.
There’s also a smattering of central bank speeches due, including from US Fed and ECB policymakers, but we’ve heard a lot of commentary in recent weeks. As such, it’s hard to imagine that anything “new” will be conveyed.
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