The Australian dollar is up this morning, and has made back most of its losses from last Friday. The Aussie started gaining following today's mid-year budget update, which predicted the deficit would shrink faster than expected. The deficit is likely to shrink to A$23.6b from A$29.4b predicted in the previous budget. As the country is likely to maintain its AAA debt rating, the currency is gaining as a result. The Aussie has also been supported after the ruling government's thin majority is likely to be held intact following a poll over the weekend. Our medium-term outlook on the currency remains bearish.
AUD/USD is currently up and trading just above 0.7660. Looking at EUR/AUD, the pair is flat and currently just above 1.53690. The GBP/AUD exchange rate is flat and currently above 1.7410.
This is a very light week for economic data and events relating to the Australian dollar. The government’s mid-year economic and fiscal outlook projected a shrinking budget deficit. Tomorrow, we’ll get the RBA’s meeting minutes. Last week, employment changes beat expectations by a wide margin.
As the currency weakens on lower rate hike expectations and slow growth, we are now bearish on the Australian dollar in the medium-term. Looking at a weekly chart, the Aussie is trading within normal conditions. Our analysis is based on various technical indicators.