Malcolm Turnbull the Prime Minister of Australia has threatened to initiate a double dissolution, the last time this was used in Australia was 1987. The mechanism is designed to break deadlocks when the Upper House (Senate) rejects legislation that is proposed by the Lower House. The Upper House has rejected the proposed Labour reform bills on five occasions and Mr Turnbull has threatened to bring the election forward to see it past.
The Senate will be given three weeks to now debate the bill and if rejected again an early general election will be called. Australia was already going to the polls later in the year but the election could now be called to take place as early as the 2nd July.
The Australian Stocks were down 0.35% after a two week positive run on the back of the news. However the AUD is already up a cent against Sterling, suggesting the markets recognise the bill is something that needs to be implemented. General Elections are almost always very volatile periods for a currency and if the election is announced for the start of July expect to see significant swings over the coming months.
The AUD has benefited greatly from high commodity prices over the last week, reaching high 0.53’s as a peak Thursday last week. Whilst the price of oil continues to increase and natural resources are at a month high the Aussie Dollar should have some continued strength.
China the biggest exporter to Australia has also announced some confidence in its housing market as prices rise along with the Bank of China suggesting they are starting to dial down their influence over the Chinese stock market.
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