FOREX-Aussie set for biggest rise in 2019 after shock election win

* Dollar firm on heightened trade tensions
* Pound recovers after biggest weekly drop in six months
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, May 20 (Reuters) - The Australian dollar surged on
Monday and is on track for its biggest rise this year as
investors cheered a shock election win by Prime Minister Scott
Morrison's conservative coalition, though mixed global stocks
broadly weighed on risk appetite.
The Aussie was last up 0.9% at $0.6926 AUD=D3 , having
bounced from a four-month trough of $0.6865. It was briefly
quoted as high as $0.6990 but dealers said that was a miss-hit
and the actual transacted peak was $0.6938. "The surprise victory is fuelling the rally as many expected
the Labour party to win but an Australian rate cut is still very
much on the cards in the coming months and that will weigh on
the currency," said Esther Maria Reichelt, an FX strategist at
Commerzbank in Frankfurt.
The centre-left Labor party had been tipped to win the
federal election, beating Morrison's centre-right Liberal
National Coalition, which investors see as more
business-friendly. Tepid economic data, including a rising jobless rate has
stoked expectations the Australian central bank will cut
interest rates as soon as July. 0#YIB:
Elsewhere, the dollar held surprisingly firm on Monday,
extending its gains from last week as concerns about a festering
trade war between the United States and China burnished the
safe-haven appeal of the greenback.
Positioning data offered a glimpse that the dollar strength
may be tenuous, however, as investors have quietly trimmed some
of their long positions in the U.S. currency against both its
developed and emerging market rivals.
Against a basket of its rivals, the dollar .DXY steadied
at a two-week high above 98.
The pound GBP=D3 recouped some losses after posting its
biggest weekly drop in six months last week, edging 0.2% higher
at $1.2736 and 0.1% stronger against the euro EURGBP=D3 at
87.62 pence.
Prime Minister Theresa May said on Sunday she would make a
"new bold offer" to British lawmakers in an attempt to get her
thrice-defeated Brexit deal through parliament before she leaves
office.