The Australian election on Saturday produced a new government, with a few different policies that may have an impact on the AUD in the longer term, if the promises are kept (we are talking politicians here … ).
But what about the immediate outlook for the AUD, what has changed?
- The incoming government is likely to reduce the fiscal deficit ever so slightly more quickly than the outgoing government there may be negative effects on the economy from this increased fiscal drag. This may be offset by a boost in confidence (at least in the short term) on optimism, confidence etc.
- Watch for any increase in mining capital investment
- Watch for ‘transition’ of investment into other sectors of the economy
- Watch China, as always for AUD the developing China story is of importance – signs of growth here are a positive for the AUD, signs of weakness, not so.
In brief, the drivers of the Australian economy have not changed, but expect a bit more optimism in the short-term, ‘honeymoon’ period.
