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AUD/USD Eases Away from 0.94 Ahead of ‘Tough Budget’ Unveiling

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AUD/USD Eases Away from 0.94 Ahead of ‘Tough Budget’ Unveiling

The Australian dollar was treading water in the North American session, backtracking from a daily high of 0.9385 US ahead of an active Tuesday session that features the unveiling of the latest Australian budget.

The AUDUSD pair was trading at 0.9360, unchanged from the previous close. The pair advanced more than 0.1 percent over the previous five days. Key support levels include 0.9366, 0.9312 and 0.9289. On the upside, resistance is found at 0.9372, 0.9395 and 0.9418.

The AUDNZD extended its winning streak, advancing 0.12 percent to 1.0866. The pair is eyeing the 1.0903 resistance. Above this level, resistance is found at 1.0930 and 1.0957. On the downside, initial support is found at 1.0843, followed by 1.0816 and 1.0786.

Strong economic data have propelled the Australian dollar in recent months. The forex market continues to speculate about the Aussie’s high point, as many feel the currency bottomed out earlier in the year.

In economic data, Australian business confidence improved in April despite the government’s ‘tough budget’ rhetoric, the National Australia Bank reported today. The business confidence index climbed from 4 to 6, surprising many economists who were expecting a much more subdued reaction ahead of the government’s budget statement scheduled for Tuesday.

Confidence levels increased despite a slight dip in overall business conditions, the NAB survey showed. Australia’s business recovery continues to be sluggish, as the wholesale and mining sectors continue to face the biggest challenges.

The NAB said it expects first quarter growth to be stronger, thanks in large part to a stronger contribution from net exports.

On Tuesday the Australian Bureau of Statistics will report on housing data, including information on house prices, home loans and investment lending for homes. The Australian government will deliver its budget Tuesday evening.

Prime Minister Tony Abbott is expected to introduce some of the harshest budget cuts in years on Tuesday. Abbott is reportedly seeking to cut 200 spending programs and tighten eligibility for social assistance such as jobless benefits and the old-age pension. The latest economic blueprint is also expected to raise the retirement age to 70. Abbott also seeks to implement a 2 percent wage levy on high-income earners to shore up the budget deficit. Australia’s deficit is expected to reach $123 billion US over four years.

The approach Abbott is expected to take has attracted a fair share of critics, who say deep budget cuts could further slow the Australian economy. Australia is still reeling from a sharp drop in mining investment, as the resource-rich country continues to search for new avenues of growth.

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