Is it morning or mourning in America? - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the Trump presidency would bring about the biggest changes in many decades in everything from taxation policy, to trade policy, social spending, immigration and geopolitics.

Key Quotes

“Republicans retained both House and Senate, providing the freest hand for a president since Obama’s 2009-10 window of full Democratic control. Markets had been priced for a Clinton presidency but constrained somewhat by Republican control of at least the House.”

“Trump's strong protectionist stance was arguably the foundation stone of his campaign, though we will have to see just how he plans to keep his promises on trade. The Trans-Pacific Partnership is set to be shelved, perhaps ultimately scrapped. NAFTA is likely to be renegotiated. Along with Mexico (peso -7.7%), Asia's trade surpluses with the US will be in Trump's crosshairs. Top of the list is China. Trump has promised to designate China a currency manipulator on “day one”. China will of course not take kindly to such actions.”

“Some will argue that Trump will become pragmatic and centrist on trade once in the Oval Office. If so, he will risk alienating his core supporters. Clarity will take time. Until then, we believe AUD will bear a risk premium linked to the threat to Asian trade volumes that would not have applied had Clinton won. This should limit the upside for AUD from the ongoing commodity price rally. AUD/USD 0.78 should remain difficult.”