Currency traders don't think a 'Brexit' will happen, driving the Australian dollar to a 2-month high

Photo: Oleg Nikishin/Getty Images

The UK is almost certainly not going to vote to leave the European Union. The so-called “Brexit” outcome has been scuttled.

That’s clearly the view being expressed by Australian dollar traders early on Thursday morning with the AUD/USD now sitting comfortably above the 75 cent level, having traded as high as .7527 in overnight trade.

As at 7.50am AEST, the AUD/USD now sits at .7524, a full one cent above Wednesday’s opening level.

It now sits at the highest level seen since early May, extending the gains from late May to over 5%.

If there was ever a sign that investors think a Brexit is off, this is it. The Australian dollar is a well known proxy for investor risk appetite, and traders have clearly already cast their votes.

AUD/USD Daily Chart

The catalyst for the sharp rise overnight was a continuation of a familiar theme: polling on the likely UK referendum outcome.

While the polls remain close, almost all now have Remain in the lead, helping to bolster confidence across financial markets.

Thin market conditions, largely as a result of large investors sitting on the sidelines before the referendum results are known, is also contributing the outsized moves being seen in the Aussie and other risk assets.

With next to no major data scheduled for release over the next 24 hours, speculation over the UK referendum outcome will be the main source of intraday market volatility on Thursday.

Here’s the Australian dollar scoreboard.

  • AUD/USD 0.7518 , 0.0018 , 0.24%
  • AUD/JPY 78.8 , 0.51 , 0.65%
  • AUD/CNH 4.9462 , 0.0118 , 0.24%
  • AUD/EUR 0.6633 , -0.0005 , -0.08%
  • AUD/GBP 0.5077 , -0.0021 , -0.41%
  • AUD/NZD 1.0475 , 0.0013 , 0.12%

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