Markets watch Australian election

May 17, 2019

A big end to the week coming up for markets, with traders keeping a close eye on Australia’s national parliamentary election, to be held on Saturday.

The dollar strengthened overnight, sending paired currencies down. The EURUSD opened the day at $1.12007 and climbed early, peaking at $1.12234 mid-session. The fell shortly after the peak, hitting lows of $1.11653 late in the day. It has come off those lows and is currently trading at $1.11738. The GBPUSD followed a similar path to the euro, succumbing under the weight of a stronger dollar. The pair began the day at $1.28403 and lifted to a high of $1.28511 heading into mid-session trading. The pound started its slide shortly afterwards, declining over the back half of the day, bottoming-out at $1.27863. It has stayed near those lows and is currently trading at $1.27955.

Indices went off to the race overnight, with the Dow leading the way. The index opened at 25,675.28 and dipped to an early low of 25,554.52. The Dow stayed near those lows for the next few hours before the rally kicked in, where it piled on more than 400 points, peaking at 25,956.72 late in the day. It has come off those highs slightly and is currently trading at 25,889.85. The Dax benefitted from the rallying Dow, piling on around 300 points from its low. The German index opened at 12,039.99 and dipped to an opening-hour low of 12,014.55. The rally started shortly after touching that low, surging to a high of 12,313.54 late in the day, before closing at 12,269.73.

The day ahead sees the release of a few pieces of data, but it is events away from market data that will be of interest to traders. Australia will be holding their national election on Saturday. The incumbent Liberal Party is seen as an outside chance of remaining in power, while the opposition Labor Party are favourites. Both have very different agendas for the country, so many see this as a nation-defining election. The race has tightened in recent weeks, so a hung parliament (where a winner cannot be decided without negotiations with minor parties) is not out of the question. If the vote count is extremely tight, we may not have a result until sometime next week. This election result could have ramifications for the SPI200 and the AUD.

Data released today includes:

Japan – Tertiary Industry Activity

Europe – Final CPI & Final Core CPI, ECOFIN Meetings

US – CB Leading Index, Prelim UoM Consumer Sentiment & Inflation Expectations, Treasury Currency Report, FOMC Member Richard Clarida speaks

 

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