Australian Dollar Trend Little Changed Amid Leadership Uncertainty
THE TAKEAWAY: Australian PM Gillard Calls for Leadership Ballot following Foreign Minister Rudd’s Resignation > Tussle Introduces Risk of Early Election > AUDUSD Reaction Muted
Australian Prime Minister Julia Gillard called for a leadership ballot early Thursday morning in order to put to rest concerns that former PM Kevin Rudd would be a better leader of the Labor Party. Amid record-low approval ratings, Gillard seeks to cement her position in the executive role she seized from Rudd in an internal coup in June 2010.
Yesterday, Rudd resigned his position as Gillard’s Foreign Minister, a move reflecting a lack of unity within the Labor Party. Gillard says that the Australian people “need a leadership ballot to settle this question once and for all,” and that she will abandon her hopes for Labor Party executive roles in the event her colleagues choose Rudd over her. Gillard urged Rudd to take the same pledge.
In the event that Rudd or Gillard quit politics, the Labor Party would lose its single-seat majority in the Australian Parliament, providing the Opposition with an opportunity to call early elections or form a new government, given it had the support of independents.
Trader reaction to the call for a ballot was minimal. The AUDUSD had been trending downward for nearly a week, and the pair’s response to Gillard’s announcement was muted. The introduction of political uncertainty triggered only a brief bout of seesaw volatility, with AUDUSD spiking lower only to quickly recover and resume its already-established gradual descent.
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