Australia has a new left-leaning government

Markets will be walking on Monday to a new government in Australia, whose new leaders are yet to be sworn in following the Labor Party's victory Saturday.

In what is a seismic shift in its politics, the Aussie currency traders will be weighing the implications for markets following almost a decade of conservative leaders and voters that are fed up with the two-party system. Voters have turned their back on the ruling coalition, instead are now backing those who campaigned for more action on climate change, greater gender equality and political integrity.

''The impact of the outcome will most likely be felt the most in fiscal policy, as Shadow Treasurer Chalmers has promised greater spending if Labor returns to power,'' analysts at Brown Brothers Harriman argued. 

However, the main focus for the Aussie currency is on the central bank. Data of late likely has not met the governor's threshold of there needing to be “a very strong argument” for the RBA to “deviate” from moves of 25bp in coming months, analysts at ANZ Bank said. 

''Still, we think the option of a 40bp move will be considered at the RBA’s June meeting before a move of 25bp is chosen.''

For the week ahead, Chris Kent, Assistant Governor (Financial Markets), will speak at the Kanganews DCM Summit on 23 May, while Luci Ellis, Assistant Governor (Economic), will speak at the UDIA National Conference on 25 May.