The Australian dollar is pushing higher to start the week

Mark Nolan/Getty Images
  • The Australian dollar has opened the new trading week fractionally higher.
  • A peace summit between Donald Trump and Kim Jong UN next month now looks to be back on while Italy’s President has blocked the appointment of eurosceptic Paolo Savona as Italy’s new economy minister.
  • The United States and United Kingdom have market holidays today.

The Australian dollar has popped higher in early Asian trade on Monday morning, helped by geopolitical news released over the weekend.

Here’s the scoreboard at 8.05am in Sydney.

AUD/USD 0.7556 , 0.0008 , 0.11%
AUD/JPY 82.88 , 0.33 , 0.40%
AUD/CNH 4.8249 , 0.003 , 0.06%
AUD/EUR 0.6469 , -0.0008 , -0.12%
AUD/GBP 0.5677 , 0.0009 , 0.16%
AUD/NZD 1.0910 , 0.0015 , 0.14%
AUD/CAD 0.98 , 0.0007 , 0.07%

As the scoreboard reveals, the Aussie is trading higher against all major currencies except the euro, the latter benefiting from renewed political chaos in Italy that has seen the odds of fresh elections in Europe’s third-largest economy increase substantially.

According to Politico, Italy is likely heading for a ‘technocratic’ government imposed by the head of state after President Sergio Mattarella rejected the populist 5Star-League alliance’s choice of eurosceptic Paolo Savona as economy minister.

“Membership of the euro is a fundamental choice for the future of our country and our young people,” Italy’s President said in a statement.

Politico says Mattarella appears to be leaning toward appointing a ‘presidential’ or ‘technocratic’ government that would govern the country ahead of a new vote early next year, rather than calling an election immediately.

The inability to form government with a eurosceptic as finance minister has helped to boost the euro, and with it other risk assets such as the Australian dollar.

“For now, the euro’s recovery is likely to continue and Italian bond spreads over the euro-core will compress,” said Ray Attrill, head of FX Strategy at the National Australia Bank (NAB).

The Aussie’s push higher was also supported by a tweet from US President Donald Trump on Sunday that suggested the summit between himself and North Korean leader Kim Jong Un scheduled to be held on June 12 in Singapore is now back on.

The net effect of the Italian and Trump news has seen the AUD/USD rise to as high as .7565, up from Friday’s close of .7548. It currently trades at .7556.

AUD/USD 5-Minute Chart

Turning to the session ahead, geopolitics look set to dominate yet again due to a quiet economic calendar and holidays in the UK, Germany and United States.

There are no major releases scheduled in Asia with most of the data points later in the session second-tier in nature.

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