According to news reports, a Trump Presidential win could negatively impact one world currency. Reports indicate that the Australian dollar would suffer if Trump were elected U.S. President. One foreign exchange strategist calls the Australian dollar a “surprise trade” in the economic arena.
Boris Schlossberg, who is a managing director at BK Asset Management, said that the Mexican peso has been an “inverse proxy for Trump’s political fortunes in the currency market . . . .” It appears the currency rises and falls, depending on Trump’s popularity at the polls.
Trump, who has made global trade a major issue in his election campaign, does not like the fact that the US imports goods from Mexico. So, if he is elected President, his policies are expected to hurt the economic system in the country. Schlossberg commented that China is also looked upon with economic disregard by Trump.
He said that Trump has continuously suggested that China is a problem for the economy of the US. In turn, he has proposed to implement higher taxes on Chinese imports. Trump also says that US leaders should take a hard stance on managing China’s currency.
That is where Australia comes into play. The country supports almost all the commodity products that go to China. If Trump wins the Presidential election, it will create a backlash on Australia’s economic efforts. In fact, China is Australia’s biggest trading partner and Australia is China’s sixth-biggest partner in this regard.
Schlossberg added, “. . . [S]ince the Australian dollar benefits from the rate differential with the U.S. dollar, the Aussie currency could suffer if Trump were to clinch the win and likely raise rates. . . .”
According to an NBC news survey and poll, just over 50% of potential voters believe Democratic nominee Hilary Clinton won the first Presidential debate while just over 20% thought Trump was the winner. During the debate, the Mexican peso strengthened significantly against the US dollar. The Australian dollar also rose slightly.