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24th August 2018
Australia is on the verge of swearing in its sixth Prime Minister in the last 8 years (for those new to the game, that’s not a good ratio). If, like us, you’re struggling to keep track of who is actually in charge, we’ve opened up the history books to work out how this potential switch-a-roo will impact the Aussie dollar and your travel money.
Let’s take it back to the first Australian Labor Party spill, which took place on the 24th of June 2010. On this day, the notorious Kevin ’07 was replaced by Julia Gillard, who had challenged him the day before.
The week leading up to this, the AUD was experiencing a small amount of growth, but as speculation began to circulate and Gillard announced her challenge on the 23th of June, the dollar began to fall. By the time Rudd was replaced the dollar had steadied back to its original figure.
Fast-forward two years, and Rudd is attempting to make a comeback against Gillard. On the 23rd of February 2012, Gillard announced a ballot for leadership of the ALP. The next day, Rudd announced his intention to stand against Gillard (surprise) and, on the 27th of February 2012, the ballot found Gillard victorious in a 71-31 win.
During this time, the Aussie dollar was performing strongly against the USD, and this wasn’t slowed down by Gillard’s win, which increased the dollar by 0.006282. The following day the dollar experienced a small degree of growth.
Unfortunately for Gillard, her winning streak didn’t hold out for her third leadership challenge. On the 26th of June 2013, Gillard was defeated, and Rudd was sworn in the following day. The Aussie dollar acted in a similar way to the last time a PM was defeated in a ballot. The AUD had been experiencing some steady growth of 0.008971 in the five days leading up, but the day of the ballot and the next day saw the dollar weaken substantially to 0.916364.
Our most recent leadership challenge was between Abbott and Turnbull. On the 14th of September 2015, Abbott was defeated in a vote for Liberal Leadership 54 to 44 by old mate Malcom Turnbull. During the week leading up, the dollar had been growing. On the day Abbott got the boot, the dollar also experienced some growth.
However, the next day while we were busy putting out our onions and Turnbull was busy being sworn in, the dollar dropped. Despite this, the following day the dollar had strengthened again.
We are now set to see history repeat itself, as Turnbull struggles to hold on to his position as PM in the lead up to midday’s party room meeting. Peter Dutton, Julie Bishop and Scott Morrison are all vying for Turnbull’s spot. If one of these three is successful, the past suggests that the dollar may continue to fall, as it has from the 22nd of August.
If you’re a bit tired of the political ping pong that is taken placing and are looking to escape to another country; we recommend holding on to you AUD a little bit longer (or at least until our friends in parliament sort themselves out).
For some bonus info, we can look to our friends in America to analyse the impacts of a serious scandal on the strength of the dollar.
For two months, until its conclusion on the 12th of February 1999, American politics was focused on the impeachment of Bill Clinton. Clinton was charged based on perjury and obstructing justice over some girl named Monica Lewinsky.
The American market had a surprising reaction to these scandals. While stocks initially fell, they climbed thereafter until the conclusion of the impeachment. However, if Trump goes through a similar ordeal, history is not expected to repeat itself. Therefore, if Trump gets in trouble, it might be a great time to stock up on some USD.
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