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Liberal win gives the Aussie a boost

Published May 20, 2019

Author: Rowan Murphy

In a ‘miraculous’ turn of events, it looks as though we have voted in Liberals again. It is yet unclear if they will have a minority or majority government, but they have officially won the election. ‘Scomo’s’ mandate – to maintain more of the same – is an economically friendlier environment for big business than Labour’s platform and the markets have agreed,  with the local unit jumping out of the stalls this morning from Friday’s lows.

The RBA next meet on the 4th of June and the expectations for a cut to 1.25% are seemingly growing by the day. Markets have now priced in an 82% chance of rate cut – but the outlook is that it could go much lower throughout 2019. By December, markets have now priced in a 36% chance of a cut to 1.0% and a 24% chance of a cut to 0.75%, in theory this would put the Aussie under additional pressure.

This week the data releases are a little ‘light on’ locally with Monetary Policy Meeting Minutes released this Tuesday and Governor Lowe speaking in Brisbane on Wednesday, with nothing else of real importance expect to be guided by OS factors and market sentiment. Fed Chair Jerome Powell Speaks Tuesday morning (AEST), FOMC meeting minutes are released Thursday morning and finishing off the week are European Parliamentary Elections and US Core Durable Goods Orders.

Key developments to watch will be US/China Trade relations and Brexit.