MW: Australian dollar pares losses against U.S. rival
By MarketWatch
TOKYO (MarketWatch) - The Australian dollar clawed back most of losses against its U.S. counterpart Monday, after falling in the wake of Saturday's indecisive weekend election.
The Aussie was buying 89.10 U.S cents, down 0.2%, after Saturday's general election led to what will likely be the first hung parliament there in 70 years.
"The Aussie had initially tumbled at the start of the Asian trade, falling nearly 100 points from its Friday close to hit a low of 88.44 on the knee-jerk reaction to the political uncertainty Down Under," said Boris Schlossberg, director of currency research at GFT.
"However, the unit has since rallied to close its opening gap as traders began to view the stalemate as a positive event from an investment point of view," Schlossberg said in emailed comments.
The conservative coalition of the Liberal and National parties won 72 seats and the ruling Labor Party had 73. Neither side appeared likely to get the 76 seats needed to form a majority government, according to reports citing the Australian Electoral Commission. Read more on Australian election.
The dollar index (DXY 82.99, -0.07, -0.08%) , a measure of the U.S. unit against a basket of rivals, slipped to 83.021 from 83.049 late Friday.
The euro (EURUSD 1.2701, +0.0003, +0.0236%) fell to $1.2698 from $1.2711 late Friday, while the British pound (GBPUSD 1.5541, +0.0003, +0.0193%) rose to $1.5581 from $1.5541.
The euro also lost ground on the Japanese yen (EURYEN 108.4000, -0.3300, -0.3034%) , trading at ¥108.39 against ¥108.89. The dollar (USDYEN 85.3500, -0.2200, -0.2570%) traded at ¥85.37, down from ¥85.69 late Friday.
On Monday, Prime Minister Naoto Kan and Bank of Japan Gov. Masaaki Shirakawa discussed recent market developments and the world economy, according to reports citing government spokesman Yoshito Sengoku. See full story on Japan yen.
Sengoku added, however, that the two spoke for only about 15 minutes and didn't touch on the key issue of foreign-exchange intervention. They did talk about the economic drag from the current strength in the yen.
On Friday, the euro slumped to its lowest level against the dollar in more than a month, after a German official signaled that the European Central Bank will maintain emergency lending support for euro-zone institutions through the beginning of next year. See Friday's Currencies report.
