FOREX-Australian dollar gains after election surprise, yen slips

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* Aussie up 0.5% after PM's party books shock election win

* Yen eases on broad recovery in risk appetite

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

TOKYO, May 20 (Reuters) - The Australian dollar got a boostagainst the greenback on Monday following a surprise electionvictory by the country's conservative government, while the yendipped slightly on a recovery in market sentiment.

The dollar index against a basket of six currencies waslargely steady at 97.970 .DXY , having booked its biggestweekly rise since early March last week.

The Aussie was the big mover early in Asia and was last uphalf a percent at $0.6904AUD=D4 , having bounced from afour-month trough of $0.6865. It was briefly quoted as high as$0.6990 but dealers said that was a miss-hit and the true dealtpeak was $0.6938. urn:newsml:reuters.com:*:nL4N22V0CZ

The currency's upward swing came after Australian PrimeMinister Scott Morrison's centre-right Liberal NationalCoalition booked a shock win in federal elections, beating thecentre-left Labor party, who had been tipped to win. urn:newsml:reuters.com:*:nL4N22V00N

"The reaction was relatively large because the result wasunexpected," said Masafumi Yamamoto, chief currency strategistat Mizuho Securities.

"But election results in the past haven't been a big driverfor the Australian dollar. A change of government doesn'tusually lead to a big change of policy," he said.

The Aussie also found support on a statement from China'scentral bank on Sunday that it would maintain the stability ofits yuan within a reasonable and balanced range. urn:newsml:reuters.com:*:nB9N1T601N

Against the yen, the dollar gained 0.1% to 110.195 JPY= ,building on last week's gains, when it booked its first weeklygain against the Japanese currency in five weeks.

The yen dipped on a broad improvement of risk appetite amonginvestors. Data showed the Japanese economy was stronger thanexpected in the last quarter.

Japan's economy grew at an annualised rate of 2.1%,government data showed, accelerating slightly from the previousquarter's growth backed by net export gains. urn:newsml:reuters.com:*:nT9N1QS01U

The preliminary reading for first-quarter gross domesticproduct compared with the median estimate of a 0.2% annualisedcontraction in a Reuters poll of economists.

The euro was a shade higher at $1.1161EUR= , recoveringslightly after dropping last week on comments from ItalianDeputy Prime Minister Matteo Salvini that European Union rulesharm his country. urn:newsml:reuters.com:*:nL5N22T4EJ

Investors' focus this week is on the May 23-26 elections forthe new European Parliament.

Market participants will also eye European readings for aprivate purchasing managers' index that measures activity inservices and manufacturing due on Thursday, after Germany lastweek returned to growth in the first quarter of2019. urn:newsml:reuters.com:*:nL5N22R360

"If we see good PMIs, the euro will form a bottom. It couldbe the start of the recovery," said Mizuho's Yamamoto.

(Editing by Sam Holmes) ((daniel.leussink@thomsonreuters.com; Twitter: @danielleussink;+81-3-6441-1825; Reuters Messaging:daniel.leussink.thomsonreuters.com@reuters.net))

This article appears in: Politics , Stocks , World Markets , Economy
Referenced Symbols: EUR

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