What Impact could New Prime Minister (elect) Tony Abbott’s plans for Austerity have on AUS? – Vantage FX Comments

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Jay Mawji comments on what austerity could mean for Australia.

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While Australia largely escaped the full force of the global economic crisis, it may be about to catch up with them, thanks to China’s cooling interest in Australia’s mining-investment boom.

But what would any kind of austerity, as has been suggested by incoming PM Tony Abbott (Bloomberg, 30th Aug 2013), mean for the Australian economy and demand for AUS amongst the forex community?

Vantage FX’s Head of Market Analysis Jay Mawji commented:

“Austerity is difficult to achieve as the Australian economy slows but is equally important as the budget deficit grows. Of course, as Austerity further accelerates the cooling of the economy, the AUD will appear less attractive to investors. Tony Abbott has also talked of new projects and further support for the manufacturing industry, which requires easing policies that will see a downside for the AUD.”

“You can never underestimate the importance of the Asian economy and their demand for AUS minerals; if the Asian economies find their feet again the resulting demand for the AUD will surely strengthen the value of the AUD. There is also the option for the AUD to rise if there is a reversal in the interest policy although it may not be wise to hold your breath for it.”

“In summary, most of the economy rests on the demand from Asia which can't be controlled by economic policy in AUS. Austerity is always an attractive political policy, but its implementation is limited particularly with weaker growth prospects.”

Having up to the minute forex trading news and insights is what makes traders smarter and ultimately more successful especially in the build-up to major events in the forex calendar.

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About Vantage FX

Vantage FX is an internationally recognised Forex broker based in the City of London, providing foreign exchange trading services and a UK trading platform to clients in the UK, the EU and the rest of the world.

What sets forex brokers Vantage FX apart is their wide range of services and outstanding level of customer support. The company strives to provide an intuitive, interactive Forex experience by continually innovating and taking advantage of the latest trading technology, such as MetaTrader 4 and Expert Advisors as well as offering handy tools such as a forex market calendar.

You may prefer to contact our Australian Office. Phone: +61 1300 945 517 Contact: Natalie German. Website: vantagefx.com

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