Australian Dollar, ASX 200 Add Politics to Their Long Problem List

Talking Points:

  • Australian assets had worries enough
  • Lack of interest rate support and rising global risk aversion have kept AUD/USD pressured all year
  • Now Aussie politics are buckling too. Again.

Fourth-quarter technical and fundamental forecasts from the DailyFX analysts are out now.

It is fair to say that Australian local elections do not often capture the imagination of global markets. Let’s be honest here. They rarely even capture their attention.

Last weekend, one did though.

The affluent Sydney suburb of Wentworth held a by-election to replace its Member of Parliament. He was the former Prime Minister and Liberal Party leader Malcom Turnbull who left office in August. The result was a massive swing against the Liberals, a victory for independent candidate Kerryn Phelps and, most significantly, the end of the Liberal government’s wafer-thin, single-seat Parliamentary majority.

Now the government of Scott Morrison must cobble together a coalition in order to limp on in power until the next general election. That must come before May 2019.

The Australian Dollar duly took a knock on the Wentworth news. AUD/USD headed back down to within a whisker of its early-October lows, which

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