The Australian dollar is still trading above .75 cents this morning amidst some uncertainties in the UK election.
“While all eyes are on the Pound due to the much closer than expected UK election results, the Aussie is a little lower today,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
He said the Aussie’s current level is just above the low it traded on just before the release of the trade data showing a surplus.
“Yes, that’s a surplus, not a deficit. So, it’s not a bad number at all. And the big miss was because of weather-related interruptions to coal exports in the wake of Cyclone Debbie’s battering of the Queensland coast earlier this year,” McKenna said.
From his point of view, this positive trade data helps explain why currency traders are still supporting and buying the Aussie dollar above the .75 cents level.
At the same time, China’s trade data yesterday was a cracker easily eclipsing expectations with a big lift in both exports and imports.
“Traders and investors look to a lift in both sides of the trade ledger as a sign that the Chinese and global economies are doing well. So that’s positive for risk assets like stocks, and the Aussie dollar. It also feeds back into metals like copper,” he said.
In the meantime, McKenna noted that the Aussie’s rally stalled in the mid 0.7550’s as traders awaited the triple treat of the European Central Bank, James Comey’s testimony, and the UK election result.
According to McKenna, James Comey and the ECB combined to give the US dollar a little better bid. However, earlier indications that the Conservatives in the UK are in real strife and could lose their majority in the Commons has added a little weight to that bid.
“It’s no surprise the Aussie is back at yesterday’s lows. It almost never does well at times of uncertainty. And that weakness may continue based on my reading of the charts,” he added.
British Pound lower amidst impending election results
The prediction that the Conservatives will end up short of the majority needed of 326 seats in the Commons with just 314 seats sent the pound sharply lower when it was released at 7am AEST this morning.
Sitting at 1.2940/50 just before the result Pound has traded down to a low of 1.2709 – it’s at 1.2747 now for a loss of 1.55% since 7am. Against the Euro it is a similar story with EURGBP at 0.8786, up 1.55%.
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