Australian Dollar Plunges Again
The Australian Dollar got an unexpected boost over the weekend, as the shock victory of the current Australian government was registered in the hours following the closure of electoral polling stations in Australia as the votes were counted. This gave the Aussie a boost as markets opened Monday morning in the far east.
The past day has seen the Australian Dollar give up almost all its weekend gain, partly due to the fact that the return of the right of center government is not enough to fundamentally change the outlook on the Australian Dollar, and partly because the Governor of the Reserve Bank of Australia hinted at a further rate cut next month in a speech he made just a few hours ago.
The benchmark AUD/USD currency pair has fallen to trade as low as 0.6870, which admittedly is still a few pips higher than the low which was printed last week. If the price breaks that low soon, a sharper fall is probably in the cards.
This action in the AUD has had a knock-on effect upon the NZD, as it usually does, with the NZD/USD currency pair having already broken multi-month low prices over recent hours.
Other weak currencies in focus right now in addition to the Australian and New Zealand Dollars are the Euro, Swedish Krona, and the British Pound. The Euro is weak but still off both its recent and long-term lows. The Swedish Krona, on the other hand, hit an all-time low against the U.S. Dollar late in the recent Asian session. The USD/SEK currency pair is particularly interesting for traders, as Sweden has a negative interest rate, with the differential between the two currencies being strong enough to ensure many brokers will not charge you for holding long positions in this currency pair overnight (there are a few Forex / CFD brokerages that will even pay you a little for it).
Finally, there is the British Pound, weakened by the continuing degradation of Britain’s democratic norms and a refusal or inability on the part of Britain’s mainstream politicians to honor the result of the 2016 referendum. However, it seems that the GBP/USD currency pair is finding strong support at the 1.2700 area, which seems likely to prevent it from falling any further over the immediate future.