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Australia’s federal election: Outcome uncertain, AUD lower

The Australian federal election, held on Saturday, failed to form a new majority governement, as both parties fell short of the needed 76 seats, with the Liberal/National coalition obtaining 67 seats, while the Australian Labor Party won 71, with 5 seats won by minor parties and 7 not yet determined. Counting will resume on Tuesday, which will include prepoll, absentee votes.According to News.com.au: "Malcolm Turnbull said he is confident the Coalition will form a majority government in the next parliament, despite huge losses for his party that have left the result on a knife-edge." Turnbull  said: “I can report that based on the advice I have from the party officials, we can have every confidence that we will form a Coalition majority Government in the next Parliament." HSBC Chief Economist Paul Bloxham wrote a note to clients, saying: "Rising public sector debt is the elephant in the room - the fact that government debt continues to climb and neither party has clear proposition to fix Australia's structural budget deficit. That presents a risk for our current credit rating. It is easier for a government to achieve fiscal reform if it had a strong majority, and it's clear that neither party will have a strong majority."The Australian Dollar has opened the Asian session under pressure, last trading at 0.7466, as talk has it that the political deadlock may increae the risk to Australia's AAA rating, which would add to the jitter caused by Brexit and the slowdown in the Chinese economy.



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