Currency - GBP / Australian Dollar

The Australian Dollar is very mixed as we head into this weekend’s Australian election. That is certainly not surprising when there is a distinct chance of a coalition government emerging after the votes have been counted and when the very issue which caused the downfall of the previous Prime Minister is likely to rear its ugly head in the weeks ahead. Kevin Rudd lost his job over the plans to tax mining companies at 40%; it was seen as damaging to an industry which is so important to the Australian economy and as soon as his successor took office, she negotiated that down to 30% with other concessions to minimise the impact. The fear amongst miners is that if the Green party manages to become the power broker in a hung parliament, they will demand an increase in this tax and that, they say, will damage jobs and incomes. All this uncertainty has rocked the Aussie Dollar and funds have flowed out of Australian bonds into places like New Zealand and Japan ahead of the voting. Whether those funds will slope back in again is open to debate and dependent on the outcome but, as we have seen since the end of July, Australian Dollar buyers do well if they can exchange their funds anywhere near to A$ 1.74 which is roughly where the interbank market is trading right now.