Australian dollar gets a German lift

I’m not sure it will be a high-speed or especially smooth lift, but the German election result should aid the AUD at the margin.

CDU Conservatives will form some kind of coalition excluding AfD.

The hope is it will attempt to alter the fiscal cap in the German constitution, but that won’t be easy, requiring a two-thirds majority.

Without it, the fear is the new German government will be unable to address the nation’s economic woes, much like the old, and AfD will advance ever further into a blocking stake.

I don’t want to draw too many historical parallels with the 1920s, but they are there.

Anyway, the more constructive the coalition is for fiscal loosening, the greater support for EUR and AUD.

They do love one another versus DXY.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.