The Australian dollar strengthened against the other major currencies in the Asian session on Tuesday, as traders await the nations’ federal budget due later in the day.
Although, the market expects a deficit of AUD 40-41 billion, RBA Treasurer Joe Hockey said that the deficit in tonight’s budget would come in below $40 billion.
Jobs growth and a recovery in iron ore prices have boosted the recovery, and the deficits would continue to fall in the coming years, Hockey said.
Speaking at a joint party room meeting in Canberra, Prime minister Tony Abott said, “this budget is not about our political fortunes, but what is best for the people of Australia.”
The currency started rising following upbeat Australian home loans data.
Data from the Australian Bureau of Statistics showed that the total number of new home loans issued in Australia was up a seasonally adjusted 1.6 percent in March, standing at 54,686. That beat forecasts for an increase of 1.0 percent following the 1.2 percent gain in February.
A release from Fitch ratings stating that Australia’s AAA rating is not at risk also boosted the currency.
Meanwhile, the Australian stock market is higher, as banking and mining stocks are mostly higher. The benchmark S&P/ASX 200 index is currently up 28.90 points or 0.51 percent at 5,654. The broader All Ordinaries index is also currently up 22.20 points or 0.39 percent at 5,649.
Thursday, the Australian dollar showed mixed trading against its major rivals. While the Australian dollar rose against the euro and the NZ dollar, it held steady against the U.S. dollar, the yen and the Canadian dollar.
In the Asian trading today, the Australian dollar rose to nearly a 3-1/2-month high of 1.0771 against the NZ dollar and a 5-day high of 95.36 against the yen, from yesterday’s closing quotes of 1.0755 and 94.73, respectively. If the aussie extends its uptrend, it is likely to find resistance around 1.08 against the kiwi and 96.00 against the yen.
Moving away from an early 4-day low of 0.9539 against the Canadian dollar, the aussie edged up to 0.9592. On the upside, 0.97 is seen as the next resistance level for the aussie.
Against the U.S. dollar and the euro, the aussie advanced to a 4-day high of 0.7938 and a 6-day high of 1.4077 from yesterday’s closing quotes of 0.7889 and 1.4136, respectively. The aussie may test resistance near 0.80 against the greenback and 1.38 against the euro.
Looking ahead, U.K. industrial and manufacturing production for March and Australia annual budget are slated for release in the European session.
At 3:00 am ET, EU’s Economic & Financial Affairs Council is due to meet in Brussels.
In the New York session, U.S. NFIB small business index for April and U.S. Treasury Budget statement for the month of April are set to be published.
At 12:45 am ET, Federal Reserve Bank of San Francisco President John Williams is expected to speak on the economic outlook before the Association for Business Economics in New York.
The material has been provided by InstaForex Company – www.instaforex.com