The Australian dollar recovered from a wobbly start caused by political uncertainty on Monday, as stocks and commodities rose on expectations that global central banks are likely to provide more stimulus to offset the impact from Brexit. Traditional safe-haven currencies like the yen JPY= and the Swiss franc EURCHF= fell as European stock markets were in the green with some of the anxiety caused by Britain's decision to leave the European Union fading into the background for now. Trading is expected to be subdued as U.S. markets are shut for the Independence Day public holiday. During the weekend, Australia's general election produced no clear winner after more than two-thirds of the votes were counted. That gave investors an excuse to sell the higher-yielding, commodity-linked Aussie, which slid to $0.7410 AUD=D4 in thin early trade, from $0.7495 late in New York on Friday. It has since rebounded to $0.7520, up 0.3 percent on the day. "For the big picture the election result is hardly relevant," said Ulrich Leuchtmann, currency strategist at Commerzbank, adding expectations that the U.S. Federal Reserve is in no hurry to raise rates was making the Australian dollar an attractive currency for now. Bond markets around the world have been rallying, with Treasury yields falling sharply and gilt yields tumbling to record lows. Investors have priced out any chance of a rate hike by the Federal Reserve this year while a rate cut by the Bank of England this summer is almost fully priced in. STABLE POUND Sterling edged up to $1.3290 GBP=D4, stabilising after an 11 percent plunge to a 31-year trough of $1.3122 a week ago in the wake of Britain's June 23 vote to leave the EU. Some traders say the impact of Brexit could take longer to emerge given nothing concrete has been set after the referendum, including when and how that will happen. "Clearly, funds will flow out of the UK. The question is where that would money will go. The recovery in risk sentiment over the past week seems a bit risky. I would expect more safe-haven buying in the yen," said Koichi Takamatsu, head of forex at Nomura Securities in Tokyo. For the other major currencies, Brexit is starting to fade as a driver with nerves soothed by promises of more stimulus from the Bank of England and talk of UK corporate tax cuts to offset the shock of leaving the EU. The euro stood at $1.1130 EUR=, a tad lower on the day while it was slightly higher at 114.32 yen EURJPY=R. The dollar was up 0.2 percent at 102.72 yen. Source: Reuters
