Australian Dollar Fails to Keep Rally Caused by Election Surprise

May 21,2019 15:23   Source:Earnforex

A heap of Australian dollarsThe Australian dollar opened sharply higher on Monday after the unexpected outcome of the election held over the weekend. But analysts were unconvinced by the rally, and indeed the Aussie has trimmed its gains by now, losing them outright against many rivals.

While not all the votes have been counted yet, it seems that the conservative coalition led by Australian Prime Minister Scott Morrison won the Australian federal election. Furthermore, it looks like a coalition will get a majority in the government. It was a total surprise as polls were promising a victory for the Labor Party.

The currency rose on the news initially amid hopes that the new strong government will be able to tackle economic issues and implement necessary reforms, which may help the Reserve Bank of Australia to avoid an interest rate cut. Yet the optimism was short-lived, especially as the escalating trade war between the United States and China continued to make investors nervous.

AUD/USD was little changed at 0.6904 as of 18:55 GMT today after closing at 0.6865 on Friday. EUR/AUD traded at about 1.6171 after closing at 1.6244 on Friday and opening at 1.6148 on Monday. GBP/AUD closed at 1.8579 on Friday, opened at 1.8461 today, dropped to the daily low of 1.8368, but bounced to 1.8427 later.


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