The Australian dollar and the share market are expected to go down further this week as the Labor party and the Coalition begin efforts to form a hung government.

According to AMP Capital Investors chief economist Shane Oliver, “Uncertainty over who should govern, fears of a possible drift towards less business friendly policies reflecting the increase power of the Greens, worries of less decisive policy making, and a likely absence of longer term reforms under a minority government will all likely add to jitters in the Australian share market and in the Australian dollar.”

The Australian dollar closed at $89.31 against the US monetary currency, while the Australian market closed low on Wall Street on Friday. A rise in mining stocks, though, is expected since the Labor government's proposed mineral resources rent tax appears to be unlikely under a hung government.

Other investors may not be active this week. Most are likely to stay away from the telecommunications sector until the future becomes clear for a national broadband network.

Australian Prime Minister Julia Gillard began negotiations today with Coalition's Tony Abbott and three other independent party candidates. Independents Rob Oakshoft, Tony Windsor, and Bob Katter are expected to try to cut the best deal for their constituents.