Aussie under pressure as focus turns to election results

The Australian dollar has fallen early Monday morning to $0.7410. The general election in Australia over the weekend has ended in a veritable deadlock, with neither major party winning enough seats to form a majority government. This uncertainty has weighed on the AUD. The results are due on Tuesday.

Meanwhile, also on Tuesday, the Reserve Bank of Australia holds its policy meeting and all eyes will be on its rate decision. The RBA is the first major developed economy central bank to hold a policy meeting since the June 23 Brexit vote, so markets will be keen to see if it decides to ease in response to the disruption that had been caused.

The British pound was up 0.2 per cent this morning at $1.3292, but had shed one-third of one per cent on Friday. Sterling was more stable after an 11 percent plunge to a 31-year trough of $1.3122 a week ago in the wake of Britain’s June 23 vote to leave the European Union.

Brexit shock that roiled markets recently is starting to fade as a driver with nerves soothed by promises of more stimulus from the Bank of England and talk of UK corporation tax cuts to offset the shock of leaving the EU.

The euro traded at $1.1130 , versus $1.1143 on Friday, and it was little changed at 114.29 yen. The US dollar was steady at 102.48 yen.

With U.S. markets shut for the Independence Day public holiday, trading is expected to be subdued on the day. There is no major data out of Asia on Monday.

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