AUD steady as Labor claims victory in the federal election

Daily currency update

The Australian dollar closed on Friday above the psychological 70 US cent mark, following a weekly dip to lows of 0.6872. Friday was a quiet day heading into the Australian federal election on Saturday where Labor party leader Anthony Albanese claimed victory and is set to become Australia’s 31^st prime minister. The AUD finished 0.1% lower at 0.7040 despite seeing an intraday low of 0.7002 as heavy losses looked to continue on equity markets. The Dow eventually rebounded from a 600 point loss to a close of 0.03% higher. The Australian dollar opens this morning at 0.7043 as markets look to digest the impact of a new government forming and whether they will be able to form a majority government. We expect support levels to hold onto moves approaching the 70 US cent mark while any upward push will likely meet resistance at 71 US cents.

Key movers

The US dollar snapped its six-week run of moves higher last week closing at 103.02 after reaching a record high of 105.01 on Friday the 13^th. Volatility moved higher on the day seeing a 0.3% rise on the VIX as technology stocks pushed the Nasdaq lower by 0.3% to 11,354 and saw its seventh straight week of declines. Shanghai reopened a small part of its subway system on the weekend which has been closed for two months. With residents still not allowed to leave homes it is hoping an easing of restrictions by June will shift risk sentiment in the markets and boost the local economy. Elsewhere a boost in retail sales in the UK supported the Great British pound as volumes rose by 1.4% in April following a fall in March of 1.2%. The GBP/USD cross saw a 0.2% rise on the day to 1.2191. EUR/USD was 0.2% lower to close the week at 1.0560 and the USD/JPY steady at 1.2790. This week a similar story around curbing inflation will be firmly on the agenda of global central banks. This week’s focus is centralised on the RBNZ where markets are pricing cash rates at 3% by year-end.

Expected ranges

• AUD/USD: 0.7000 – 0.7100 ▼
• AUD/EUR: 0.6610 – 0.6700 ▲
• GBP/AUD: 1.7420 – 1.7900 ▼
• AUD/NZD: 1.0900 – 1.1000 ▼
• AUD/CAD: 0.9000 – 0.9080 ▲