One currency expert predicts that a Donald Trump presidency would be catastrophic for the Australian dollar.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, explained to CNBC that the Mexican peso has been the "inverse proxy for Trump's political fortunes in the currency market for the last month," seemingly moving conversely with the Republican nominee's poll numbers.
"But frankly, I think a lot of that trade has already been priced in," Schlossberg said.
Concern Trump will follow through on his protectionist measures, including building a wall on the U.S. border with Mexico, has helped the peso weaken 12 percent this year, the worst performance of 16 major currencies, Bloomberg has reported. Weak points in Mexico’s economy and emerging-market jitters also contributed to bearish sentiment toward the currency.
Schlossberg said that after Mexico, China is Trump's biggest nemesis. "Since Australia pretty much supports all of the commodity product to China, it's going to create a very big backlash onto them," Schlossberg said.
To be sure, the Australian press has been speculating about just what a Trump presidency would mean for the land down under.
“What is going to happen, regardless of who wins the White House in November, is an economic retreat from the Asia-Pacific region. This rang through loud and clear during the debate,” David Speers wrote for Switzer Daily.
"First there was the alarming suggestion from Donald Trump that China should solve the problem of North Korea’s nuclear threats by invading it. 'China should go into North Korea,' he blurted out. This has presumably been chalked up as just another meaningless throw-away line, but surely it deserves some attention," Speers wrote. "This latest idea of a Chinese invasion would absolutely rock regional stability and provoke who knows what from Pyongyang," Speers wrote.
“Trump and Clinton tried to out-do each other on who hates the Trans-Pacific Partnership (TPP) trade deal more. Disowning and discrediting the TPP has become a virtual pledge of allegiance to American jobs in this campaign. That’s a real shame for Australia and the rest of the region.”
Meanwhile, one beloved financial guru bluntly says it doesn't really matter who wins the White House.
A Trump presidency wouldn’t be the blow to U.S. business that some fear, according to Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., Bloomberg reported.
“If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett, 85, said at the company’s annual shareholders meeting in Omaha, Nebraska.
The outcome of November’s presidential election is unlikely to change the fact that the U.S. is a “remarkably attractive place in which to conduct a business,” said Buffett, who endorsed Democrat Clinton at an Omaha rally in December. U.S. companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.
Buffett, who has criticized Trump in the past and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of U.S. economic prospects.
“Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more,” Buffett said. “No presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they can’t end it.”
(Newsmax wire services contributed to this report).
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