Investing.com - The Australian dollar traded higher against its U.S. counterpart Monday in Asia despite news of an expected multi-billion dollar budget shortfall down under.
In Asian trading Monday, AUD/USD rose 0.19% to 1.0301, rebounding from a five-week low seen last week. The pair is likely to find support at 1.0203, the low from March 11 and resistance at 1.0357, Friday’s high.
Over the weekend, Australian Federal Treasurer Wayne Swan said the government there has taken a AUD7.5 billion revenue hit since October. Late last year, Australian bankers and policymakers abandoned hopes for a possible budget surplus in the current fiscal year.
There is some speculation that the budget deficit could be as high as AUD20 billion, though Deloitte Access Economics said that figure is too high. The budget deficit could be the result of declining mining revenue and government spending on programs such as education, health care and infrastructure. Australia’s next budget is scheduled to be released on May 14.
Last week, Min Zhu, deputy managing director of the IMF, said on Thursday that the Aussie is overvalued by 10%. Zhu also made similar comments regarding the New Zealand dollar.
Meeting minutes from the Reserve Bank of Australia’s most recent monetary policy meeting indicate there is room to cut interest rates, though most traders are not expecting a rate cut when RBA meets early next month. Australia’s benchmark overnight rate is currently 3%.
Elsewhere, AFP Commissioner Tony Negus said in a media interview that the strong Australian dollar has become attractive to international drug cartels looking to bolster sales of their nefarious products in the country. Drug cartels from Latin America are targeting Australia because of the dollar’s strength, said Negus.
Meanwhile, AUD/JPY jumped 0.61% to 102.95 while AUD/NZD fell 0.19% to 1.2190. EUR/AUD inched lower by 0.01% to 1.2695.
In Asian trading Monday, AUD/USD rose 0.19% to 1.0301, rebounding from a five-week low seen last week. The pair is likely to find support at 1.0203, the low from March 11 and resistance at 1.0357, Friday’s high.
Over the weekend, Australian Federal Treasurer Wayne Swan said the government there has taken a AUD7.5 billion revenue hit since October. Late last year, Australian bankers and policymakers abandoned hopes for a possible budget surplus in the current fiscal year.
There is some speculation that the budget deficit could be as high as AUD20 billion, though Deloitte Access Economics said that figure is too high. The budget deficit could be the result of declining mining revenue and government spending on programs such as education, health care and infrastructure. Australia’s next budget is scheduled to be released on May 14.
Last week, Min Zhu, deputy managing director of the IMF, said on Thursday that the Aussie is overvalued by 10%. Zhu also made similar comments regarding the New Zealand dollar.
Meeting minutes from the Reserve Bank of Australia’s most recent monetary policy meeting indicate there is room to cut interest rates, though most traders are not expecting a rate cut when RBA meets early next month. Australia’s benchmark overnight rate is currently 3%.
Elsewhere, AFP Commissioner Tony Negus said in a media interview that the strong Australian dollar has become attractive to international drug cartels looking to bolster sales of their nefarious products in the country. Drug cartels from Latin America are targeting Australia because of the dollar’s strength, said Negus.
Meanwhile, AUD/JPY jumped 0.61% to 102.95 while AUD/NZD fell 0.19% to 1.2190. EUR/AUD inched lower by 0.01% to 1.2695.