AUD/USD: Australia reported its second budget deficit within three years

AUDUSD Movement

For the 24 hours to 23:00 GMT, AUD weakened 0.62% against the USD to close at 0.9907, after the Australian government unveiled a budget that forecasted a deficit of A$18 billion for 2013-2014 fiscal year, and stated that the nation would not return to surplus until 2016-17. The government also expected growth in the country to slow down to 2.75% in 2014, from 3% in the current year. Soon after the budget announcement, the Standard & Poor’s affirmed Australia’s “AAA” sovereign rating with a “Stable” outlook.

LME Copper prices declined 2.1% or $155.0/MT to $7195.5/MT. Aluminium prices declined 0.1% or $2.00/MT to $1825.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.9896, with the AUD trading 0.11% lower from yesterday’s close.

This morning, economic data indicated that new motor vehicle sales in Australia continued to drop by 16% (MoM) in April, following a revised 0.5% fall recorded earlier. Separately, wage price index rose 0.7% (QoQ) in Q12013, less than market expectation of a rise of 0.8% and compared to an increase of 0.8% reported in Q42012.

The pair is expected to find support at 0.9845, and a fall through could take it to the next support level of 0.9795. The pair is expected to find its first resistance at 0.9976, and a rise through could take it to the next resistance level of 1.0057.

The currency pair is showing convergence with its 20 Hr moving average and is trading below its 50 Hr moving average.