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Aussie falls below 0.94 US

H.S. Borji
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Aussie falls below 0.94 US

The Australian dollar tumbled against its US counterpart Tuesday, after advancing closer to its 2014 high of 0.9460 at the beginning of the week.

The AUDUSD declined 0.33 percent to 0.9396. The trend line shows initial support at 0.9380 and resistance at 0.9457.

The Aussie’s failure to breach the 2014 high indicates it could remain within a well-formed range against its US counterpart. The currency has been supported in recent weeks by strong Australian data.

The Australian dollar has a light schedule this week with no economic data to report. On Wednesday Reserve Bank of Australia Governor Philip Lowe will moderate a discussion and give a speech at the G20.

On June 3 the RBA decided to keep its benchmark lending rate unchanged at 2.5 percent.

The minutes of those meetings, which were released last week, revealed central bankers will probably keep interest rates unchanged as the economy recovers from a slowdown in mining investment and braces for the implementation of tough budgetary reforms. The RBA is seeking a “period of stability,” and economic policy will likely focus on assisting in achieving balanced growth over the interim.

The government’s 2014 budget, which was unveiled in May, has been described as the toughest in nearly two decades. Under the new economic blueprint, the government will cut its budget deficit in half over the next year through a combination of tax hikes and spending cuts. These measures are expected to result in the loss of thousands of jobs.

The deficit is forecast to drop from A$50 billion to A$30 billion. The unemployment rate is expected to rise to 6.25 percent and stay there until 2016.

In economic data, US house prices advanced 10.8 percent in the 12 months through April, the smallest 12-month gain in more than a year, according to Standard & Poor’s S&P/Case-Shiller home price indices.

Compared to March, house prices were unchanged in April, according to the Federal Housing Finance Agency.

A slowdown in house prices was partially credited for stronger home sales in May, the National Association of Realtors reported Monday. Existing home sales climbed 4.9 percent in May to 4.89 million, exceeding forecasts.

In other trading, the Aussie fell back below the 1.08 handle against its New Zealand counterpart. The AUDNZD declined 0.15 percent to 1.0796, slightly above the 100-day moving average (1.0794). Initial support is likely found at 1.0782 and resistance at 1.0833.

In economic data, Statistics New Zealand will report on the country’s trade balance Thursday. Economists forecast a surplus of NZ$250 million in May.

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