AUD heading back below 70 US cents
As with Brexit, the fallout from the political gridlock will play out most noticeably in currency markets, particularly if S&P lowers our credit rating. The election result ensures the Australian dollar trades back below 70 cents in the medium-term. Australian companies operating offshore will benefit from this of course, but they are already very expensive. The gaming sector has clearly been targeted by the Nick Xenophon Team. There is a heightened risk of a Royal Commission into the Banks also if not in this parliament, then more likely in the next. Either way, the sector has the Sword of Damocles hanging over it in the medium-term. Commentary from APRA calling for more capital certainly doesn’t help. (Justin Braitling, Chief Investment Officer)
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