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 Australian dollar strengthens on good economic data, we are upgrading the currency to neutral. Looking at a daily chart of the Aussie, the currency is trading within normal conditions. This is based on various technical indicators.
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.