NZ dollar gains vs. Aussie as federal election leaves neither major party with clear majority

Monday 4th July 2016

The New Zealand dollar gained against its Australian counterpart after the federal election across the Tasman left neither major party with a clear majority as the final count is awaited.

The kiwi dollar rose to 96.04 Australian cents from 95.55 cents on Friday in New York. It traded at 71.58 US cents, little changed from 71.62 cents at the end of last week.

Prime Minister Malcolm Turnbull, who gambled on a double-dissolution election to seek a clearer mandate, suffered a swing to Labor at the weekend with 78.8 percent of the vote counted. The coalition won 65 seats to Labor's 71 with six not yet determined, and six going to minor parties. Counting resumes tomorrow, with 76 seats needed for a clear majority, otherwise, Australia has a hung parliament. The Australian dollar dropped to 74.47 US cents from 74.92 cents on Friday.

"The uncertainty about the result for the next few days and potential for a hung parliament will likely see the AUD under a bit of downward pressure at the start of the week," said Kymberly Martin, senior market strategist at Bank of New Zealand. The week was likely to get off to a subdued start with US markets closed on Monday for the Independence day holiday, she said in a note.

The kiwi was little changed at 53.96 British pence from 53.99 pence on Friday in New York, to remain near the highest in more than two years. Theresa May, the Conservative frontrunner to replace David Cameron as British prime minister, said she would delay any Brexit move until next year and her short-term focus would be to unify the Conservatives and the country.

The trade-weighted index slipped to 76.57 from 76.63 at the end of last week. The kiwi fell to 4.7628 yuan from 4.7654 yuan and was little changed at 73.41 yen from 73.45 yen. It traded at 64.28 euro cents from 64.35 cents.

BusinessDesk.co.nz

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