The Australian dollar clawed back on Monday after investors saw the prospect of the nation's first hung parliament in 70 years as just a blip in its long-standing political stability, which is expected to hold. So calm were investors over the idea that Australia may be stuck in a political limbo in coming days that traders said there was not many Aussie dollar sellers after an initial early spill.
Traders noted trading was subdued and said the currency's bounce was in part a result of some short-covering activity. That helped the Aussie dollar climb steadily through the day to $0.8912, a good way from the day's low of $0.8833. Analysts said the next stop-loss sell orders were only seen under $0.88, suggesting the Aussie may get some reprieve for now.
Initial support for the Aussie is around $0.8820-40, below which the next stop could be $0.8780, the 55-day moving average. Resistance should set in at 200-day moving average of $0.8948. On the yen, the Aussie rebounded to 76.15, from the day's low of 75.57. A firmer Aussie also eroded some of the euro's earlier gains, with the common currency slipping to A$1.4252, from a high of A$1.4365. Interest rates hardly moved, with the market still priced for no chance of a rate rise at the next policy meeting in September.
Australian bond futures pulled back as investors sold into recent steep gains. Three-year futures shed 0.03 points to 95.49, from a 13-month high hit on Friday. Ten-year futures lost 0.025 points to 95.07. The New Zealand dollar was little changed from opening levels at around $0.7067. It notched up against the Aussie, which lent it some support against other majors despite sluggish demand for riskier assets.
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