The hung parliament outcome of Australia’s weekend election will inevitably hit local markets for a time but the long-run impact should be small. The main political parties have similar fiscal consolidation objectives and the proposed mining tax will either be scrapped or watered down. More broadly, Asia’s demand for commodities should stay high while Reserve Bank (RBA) tightening, we judge, is not over. Therefore, we still expect that the Aussie dollar will rise over the next 12 months.
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