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00:00We heard from the RBA with the high Aussie dollar. I mean this is what's putting pressure on their transition from you know kind of a minerals based and materials based economy to more services and exports. What can Australia do here with that Aussie dollar . Well look at the moment. Angie we're in a bit of a political vacuum. Concerns about the hung parliament seems to be in focus . The Australian dollar has been fairly well well behaved. It's it's remained between 74 and 75 cents for the best part of this week. It's concerning on the downside mainly because the Reserve Bank is going to be on the sidelines until the second quarter CPI figures come out on the twenty seventh of July. If inflation data in Australia remains weak then we'll see another quarter per cent interest rate cut in in August and that should see the Australian dollar reverse slow up towards that support level of 70 to 80. But most of the focus is on this political vacuum we have at the moment with with the hung parliament in place hung Parliament. MALCOLM TURNBULL hanging on by his fingernails there as the vote continues is the only institution available to stoke the economy going to end up being the RBA Yeah absolutely. Absolutely. Look at the latest data suggest that we've got the government with 70 seats and the opposition Australian Labor Party with 71 seats. We know the minor parties including the independents have got a total of five seats. It leaves another four seats to be determined. None. Neither political party is going to form a majority on its on its own . They're going to have to negotiate with the minor parties. This is going to create a dilemma. We could see the the rating agencies downgrade Australia's credit rating. And if that happens we can see further pressure on the Reserve Bank to cut interest rates will see the Aussie dollar hit lower. It just breeds further uncertainty into this market uncertainty as well about EU and UK here less than a month after that shocking Brexit decision. Joey needs. What do you expect look we expect the B.O. to cut interest rates as early as next week. They say their policy meetings on the 14th of July . Overnight they they already reduced the capital buffer on banks from zero point five per cent to zero thereby providing further liquidity to banks to to lend to companies and households and that's to the tune of around about 150 billion pounds. So we believe the we will cut rates as soon as possible to try and calm the market to try and install a little bit of confidence post Brexit. We've already seen the sterling pound hit fresh 31 year lows today below that 130 level. In fact we see the pound sterling slipping and sliding another 5 per cent in coming weeks . We expect the support of that 125 level to hold hold until when. Until they figure out how to invoke cards for call 50 and now they're going to exit in the next two years . Exactly. Exactly it's anyone's guess on on how long that will take. But we know the UK economy is quite weak and we know that this uncertainty is just going to implode further. You've got about 75 or 80 percent of companies in the UK who have European origins and we've seen a massive massive capital flight away from the sterling pound into precious metals. We've seen you know gold and silver in particular Silver's put on 60 45 per cent in the past six months and we've seen that massive capital flight away as a hedge against uncertainty and against monetary disorder. So this will continue to put downward pressure on the sterling pound until such time as we have a bit more clarity on what the US Federal Reserve is going to do with interest rates . Well the interesting thing about Sterling is that that 45 percent increase this year that we've seen certainly has been supported by hedge funds but of recent Bloomberg taking a look . It's actually a lot of retail investors in China over the past couple of weeks keeping it at overbought levels Yeah that's right. And there's a whole heap of Chinese data coming out too in the next week or so including some investment numbers and CPI and the market will certainly look at that. You know the yuan is what five and a half six year lows. Certainly food for thought given the political vacuum that we're in at the moment but the UK economy you speak about Andrew is interesting . It's a 2.8 trillion dollar economy removing that from the EU sees the EU lose its mantle as the world's largest economy and that could help the US by default because that now becomes the world's largest economy in terms of its GDP ranking. OK. Does it help the Fed though . Well well we believe the Fed is on hold. The market's not anticipating any any rate hikes until later this year September December. But given that the US presidential election takes place in November they might even wait until after that occurs and probably wait until 2017. In fact if you look at the current market pricing there's a 20 percent chance they might even cut interest rates and that's what I'm talking about . We're talking about unprecedented territory here and in my 30 years experience in financial markets we've never seen so much uncertainty and political upheaval all at the one time. And that's going to Canada that that's going to be the telling factor .

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Pound Sinks Below $1.30: More Downside to Come?

Tony Boyadjian, senior vice president of foreign exchange at Compass Global Markets, discusses the outlook for the Australian dollar, the impact of Brexit on the Bank of England and the outlook for the pound. He speaks to Bloomberg's Angie Lau on "Trending Business." (Source: Bloomberg)

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