This week has been one for the books, with political carnage from all corners of the globe cramming our newsfeeds and diluting any sign of positive market sentiment. Politics aside, economic markets themselves have been on the quieter side, which is probably a good thing because otherwise this article would be insanely long and no-one has that sort of time on a Friday. As we take a breath before the weekend, one Aussie dollar will buy:
Unfortunately, since Tuesday, the Australian dollar has gone down against most major currencies. The one exception to this is the GBP; apparently, the colossal mess that is Brexit is enough to deplete the value of the pound more than negative market sentiment can do to the Aussie dollar.
So, what has happened in politics this week, and why is it affecting the Aussie dollar?
Brexit: Boris Johnson is not the Messiah he is just a very naughty boy
On Tuesday the British Supreme Court ruled that Boris Johnson’s government broke the law by suspending government for five weeks in the lead up to the current Brexit deadline. Johnson’s government has refused to apologise for this.
The aftermath of this revelation has been wild, especially by British standards. Parliament has since returned and have done nothing but shout at each other. There have also been calls for Johnson to resign.
Amidst all of this, the Brexit wheels continue to churn as the October 31 deadline approaches. Opposition MPs have decided they will not back an early election, or table a no-confidence vote against Johnson unless the current Brexit deadline is extended to avoid crashing out of the EU with a no-deal. Should Johnson not reach a deal by October 19, a recent bill passed by parliament requires him to request an extension until January 31. Johnson has denied wanting to do this, which means he could potentially break the law again.
You can bet that as soon as an extension to the Brexit deadline is granted, opposition MPs will be frothing at the bit to call a general election.
The democrats are craving a peach… impeachment that is
While Boris has been breaking the law over in ol’ London town, Trump has been accused of abusing his office’s power.
Long story short: earlier this week an official complaint was launched against Trump alleging he used his office powers to “solicit interference” from Ukraine in the upcoming 2020 election. Rough transcripts of a phone call between Trump and Ukraine in July shows Trump pressing Ukraine to work with his lawyer, Rudy Giuliani, and Attorney General William Barr to investigate former Vice President Joe Biden and his son, Hunter. This is despite there being no evidence that either of the Biden’s has done anything wrong.
As if this wasn’t bad enough, the complaint further goes on to say that senior White House officials intervened to lock down any records of the phone call, a.k.a. Cover it up.
This complaint spurred the Democrats (Trump’s opposition) to launch a formal impeachment inquiry that will focus primarily on this phone call. Afterwards, there could be further investigation into other instances where Trump has abused his power.
Trump replied with a tweet (of course) saying “THE DEMOCRATS ARE TRYING TO DESTROY THE REPUBLICAN PARTY AND ALL THIS IS STANDS FOR”, caps and all. This tweet then disappeared from his newsfeed a few hours later.
Why is this a big deal? Well, if Trump and his mates have been working with a foreign government to influence the upcoming matter, it is essentially an assault to the United States electoral and democratic process.
At this stage, we do not know who the whistleblower is, only that he was allegedly a CIA officer that worked at the White House at some point. No doubt we will have plenty more to report on this story next week.
Mounting blame behind Iran for Saudi oil attacks
US claims that Iran was behind the attacks on a Saudi Arabian oil facility two weeks ago have been backed up by the UK, France and Germany. Iran continues to deny any involvement.
Iran is currently struggling under economic sanctions that were put in place by Trump’s government. Until these sanctions are removed, President of Iran Hassan Rouhani refused to take part in nuclear talks. This is pretty concerning considering the mounting tension in the Middle East.
So, to summarise, Boris Johnson illegally suspended parliament to prevent a further Brexit delay, Trump is being accused of undermining democracy and Iran isn’t willing to talk about Nuclear warfare. Sheesh.
What’s Scott Morrison been up to? Well, aside from not being asked to speak at the United Nations Climate Summit, he has been checking out Macca’s new drive-through tech in Chicago.
Big Mac’s aside, the culmination of this political tension is not only causing concerns over market volatility, but they are severely dampening market sentiment. Like a wet rag to a flame, weak market sentiment puts out the Aussie dollar’s fire and leads to downward pressure on its value against other currencies.
The Australian dollar is also seeing the negative impact of easing Iron ore and thermal coal, prices. All of these factors, alongside the weakening Australian economy, will no doubt be considered next Tuesday when the Reserve Bank of Australia meets and is expected to cut interest rates. Another not so great move for the Aussie dollar.
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