- The Australian dollar has shown no real reaction to the Wentworth by-election result, something that appears likely to push the ruling LNP into a minority government.
- The AUD/USD has been stuck in a narrow trading range between .7040 to .7150 since early October.
- There’s no major data releases scheduled at home or abroad on Monday, leaving geopolitical headlines, sentiment and technicals to dictate direction.
The Australian dollar remains stuck in the trading range it’s been sitting in since the start of October, showing no real reaction to domestic political developments seen over the weekend.
Here’s the scoreboard as at 8am in Sydney.
AUD/USD 0.7114 , -0.0006 , -0.08%
AUD/JPY 80.1 , 0.08 , 0.10%
AUD/CNH 4.9318 , 0.0028 , 0.06%
AUD/EUR 0.6176 , -0.0002 , -0.03%
AUD/GBP 0.5441 , 0.0003 , 0.06%
AUD/NZD 1.0758 , 0.0047 , 0.44%
AUD/CAD 0.9322 , -0.0003 , -0.03%
As the scoreboard suggests, it’s been a proverbial dog’s breakfast to start the week with the Aussie rising against some majors but falling against others.
The mixed performance suggests there’s no real concern about the prospect of a minority government in Australia ahead of the next federal election, scheduled to occur no later than May next year.
“The Liberals’ loss of the of the blue ribbon seat of Wentworth on Saturday to Independent candidate Kerry Phelps — subject to final confirmation, of course — doesn’t materially increase the chances of an early election in so far as Phelps has… indicated in-principle support for the government on matters of confidence and supply,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.
“As such it hasn’t been a material market factor at this morning’s market re-open.”
While it’s had little reaction on currency markets so far on Monday, Attrill says the result will increase market conviction that the next election “is likely to produce a change of government”, something that had been suggested by the polls in the lead up to last weekend’s by-election.
With next to nothing on the domestic and international economic calendars on Monday, domestic political developments, geopolitical headlines surrounding Saudi Arabia, sentiment and technicals will likely dictate the Aussie’s broader direction.
In particular, the performance of Chinese markets — especially the yuan and stocks — could prove to be influential today.
RBA Deputy Governor Guy Debelle will offer brief remarks from Sydney at 1pm AEDT. Apart from that there’s nothing of interest in Asia, Europe of North America, likely ensuring a quiet session in the absence of any unexpected headlines.
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