It's been a wild 24 hours for the Australian dollar, and that looks set to continue today

Photo by China Photos/Getty Images

The Australian dollar endured another wild session overnight, continuing the theme established in Asia, with the currency initially plunging in early European trade before screeching higher in the second half of the session.

In the end the AUD/USD finished the session at .7359, down 0.61% from Wednesday’s closing level. The percentage decline really doesn’t do justice to the volatility seen during the session with the pair trading in an enormous 2% range throughout.

The catalyst fore the recovery in risk assets, including the Aussie dollar, came from tragedy following the death of British Labour MP Jo Cox — an advocate for Britain remaining within the European Union — following a brutal daylight attack in Yorkshire, something that was seen by markets as bolstering the case for UK to remain within the EU.

“Market participants appear to have interpreted the killing as a blow to support for the leave camp,’said Joseph Capurso, senior currency strategist at the CBA.

Underlining the effect the tragic event had on financial markets, and sentiment towards the outcome of the UK referendum, the GBP/USD — after falling towards 1.4000 earlier in the session — rallied hard in the latter parts of trade, jumping over 250 pips to close Thursday trade at 1.4201.

Safe haven assets such as gold — having surged to a fresh two-year high in early European trade — also reversed course, eventually closing the day down 1%.

Although the attack was seen as bolstering the case for a “Bremain” outcome at the June 23 referendum, thin market conditions and days of constant selling likely contributed to the outsized recovery in risk assets.

With little on the economic data calendar to dictate direction in the Aussie today, the same factors that were influential on Thursday — movements in the Japanese yen, global stocks and bond markets — will likely remain key as to what the Aussie will do today.

Market liquidity is likely to remain thin, suggesting volatility will once again ensue.

As at 8.05am AEST, the AUD/USD currently buys .7365, up 0.08% for the session.

AUD/USD 5-Minute Chart

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