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Aussie dollar eyes range trade in lead up to Brexit vote

Xinhua, June 20, 2016 Adjust font size:

The Aussie dollar has rallied above 74 U.S. cents ahead of Britain's Brexit referendum at the end of the week from a weaker greenback and a 2 percent surge in oil.

At the Asian open on Monday, the Australian dollar was trading at 74.34 U.S. cents, up from 73.79 U.S. cents at Friday's close.

Commodities -- thus commodity based currencies -- were supported from a weakening greenback with at 4.2 percent lift in benchmark crude, and some late gains in iron ore.

The Australian dollar is likely to be range bound in the run up to Britain's Brexit referendum (results due Friday morning AEST), with the unit expected to experience heightened volatility on Friday, Commonwealth Bank of Australia chief currency strategist Richard Grace said.

Should Britain leave the EU, global equity and commodity markets will fall weighing on the Aussie by 2-3 percent, but if it remains, the Aussie could rally 1 to 2 percent on lifting global equity and commodity markets, Grace said.

The latest polling shows the "remain camp" has pulled slightly ahead with market odds showing only a 30 percent chance of British leaving. However, there are still five more polls to be released before the vote, meaning there will be heightened volatility as "this is still a market that is fragile and happy to turn on a dime," IG chief market strategist Chris Weston said.

By 0951 local time (AEST) on Monday, the Australian dollar was trading at 74.27 U.S. cents. Endit