Australian dollar gains after PM re-elected

The Australian dollar was up 0.5% on Monday after Australian prime minister Scott Morrison was re-elected in a shock win federal election

Australia Prime Minister Scott Morrison Source: Bloomberg

The Surprise election victory by the Liberal party gave the Aussie a boost against the Greenback, while the yen dipped slightly.

The dollar index against a basket of six currencies was largely steady at 97.970 , its biggest weekly rise since early March last week.

Australian dollar price

The Aussie was at $0.6904 on Monday after bouncing from a four-month trough of $0.6865.

It comes after, Prime Minister Scott Morrison's Liberal National Coalition won the federal elections, beating the centre-left Labor party, who were expected to win.

The Aussie also found support off the back of a statement from China's central bank on Sunday, saying it would maintain the stability of its yuan.

The New Zealand dollar also edged higher, climbing up to $0.6530, away from a seven-month low of $0.6514.

RBA rate cuts

Rate cuts have been priced in, as investors brace for Reserve Bank of Australia (RBA) Governor Philip Lowe's speech on Tuesday, where the analysts say a rate cut is likely.

It comes after the central bank said an easing might be needed if the labour market did not stay strong. National Australia Bank (NAB) economist, David de Garis says after last week’s soft readings on the labour market, an RBA rate cut is expected in June.

"The numbers pointed to a risk that labour market spare capacity will not reduce, putting the RBA's getting back to target inflation forecast at risk," he said.

The futures market implies a 62% chance of a quarter point cut in the 1.5% cash rate when the RBA board next meets on June 4. A move is almost fully priced for July and a further cut to 1% is baked in by December.


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