Tony Abbott wins Australian election, what it means for the Australian dollar

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The Liberal-National coalition won Australia’s election on Saturday after the Labor party led by Kevin Rudd conceded defeat. The result was widely expected but the margin of victory was likely smaller than forecast.

New Australian PM Tony Abbott

New Australian PM Tony Abbott

The main election pledges that will affect the Australian dollar are vows to end the carbon tax and mining tax. Oftentimes, election promises vanish after the polls but early in his victory speech Abbott was quick to point to the carbon tax.

A government that says what it means and means what it says. A government of no surprises and no excuses. A government that understands the limits of power as well as its potential. And a government that accepts that it will be judged more by its deeds than by its mere words. In three years’ time, the carbon tax will be gone.

They key for the Liberal-National coalition will be the Senate vote and that will take some time to sort out. They will likely need to cobble together a deal with the Greens or independents to govern.

The results of the election were baked into the market already so don’t expect the Australian dollar to make a strong move at the open. All other weekend news being equal, look for minor AUD strength because the tail risks of a shock Labor win have been removed and Abbott continued to pledge to kill carbon and mining taxes. Whether that restarts the Australian investment pipeline is another story.

AUD/USD ended the week at 0.9180.

Author: Adam Button

Adam Button is the managing editor of ForexLiveâ„¢. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.

13 Comments

  1. could it have any effect on AUDNZD ?

  2. Same thing. Minimal

  3. what will be AUD/USD movement on monday ? up or down ?

  4. The main election pledges that will affect the Australian dollar are vows to end the carbon tax and mining tax. He won because he is going get rid of these regressive taxes.The carbon tax is just a way foe the government to pickpocket the consumers by getting them to pay higher electric bills ,fuel bills etc.The US is also trying to impose a climate change bill.They couldn’t pass it with the global warming bill so the name change to fool the taxpayer again.

  5. Do you think we’ll see continued AUD strength this week or a resumption of the downtrend?

  6. I don’t agree with the minimal upside diagnosis for the aud currency. There has been much uncertainty with the labor govt and the management brings at least some clarity even if policy isn’t perfect for the aud. Removal of that uncertainty should boost aud ten plus percent over coming weeks and on certain pairs such s the aud cad the technicals are perfect for the open tomorrow. Trading plan next week : Long gold n silver, long aud cad, hedged with long Gbp usd. Comments welcome.

  7. Hi,
    the business confidence, consumer confidence and overall sentiment should improve in the new strong ans stable government

  8. Sorry, my previous post was accidently submitted not completed…

    Hovewer,let’s not forget one strong player in this game – RBA. They will keep talking down the currency even after they have removed the easing bias. RBA will not be happy with 0.93+ audusd

  9. I’m curious as to what extent the possible removal of the carbon tax has had (and maybe will have?) on inflation expectations.

  10. imo on the contrary, might signal lower aud.

    long run lower revenue with low taxer income.

    aud has always been the china story, with is turning into a hot and mostly cold recently.

    sell the news event?

  11. 10% gain for AUD is very optimistic to say the least.

  12. Pleases anybody, would it have any effect on eur/aud? I was short into the weekend.

  13. To clarify, not necessarily ten pc on the open, it will be a swing trade movement. The only sure thing about forex is that the markets rise and fall. The reduction in uncertainty, technical factors make a good buy opp.
    As stated earlier, the aud cad pair is perfectly placed for a rise, bouncing off the 38.5pc retracement on the daily charts right about now.
    Regarding eur aud pair, likely some upside potential but not so perfectly placed and euro isn’t stable so best to avoid. Look to sell after a few hours or Asian market trade after the open.
    Good luck everyone.

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