Australia is in focus today after the results of national elections showed the ruling Labor Party performing worse than expected. The election is still too close to call, the Labor Party leads a Liberal-National coalition 72-70 but five seats are too close to call. Independents have won four seats and with at least 76 seats needed to form majority government, the two main parties are now scrambling to secure support from independents.
The initial reaction to the election was to sell AUD but that later reversed and AUD/USD is back to about flat on the session. There’s a cliché that election uncertainty is a negative for a currency but the market has learned from the experience in the UK. Tight elections and “hung parliaments” are rarely as negative as media scare-mongerers make them out to be.
Technically, the indications are clear. A huge reversal appears underway with the 50-day and 100-day moving averages providing support. It’s hard to be bearish with the hourly chart consistently heading higher and closing the gap formed at the open. There is no resistance until 0.9017 but keep an eye on the RSI.
