AUD Dips again following Budget announcement

AUDJPY, Daily              

The Australian government earlier today issued the Australian Mid-year Economic and Fiscal Outlook. The plan is to run a AUD36.5 bln deficit for 2016/17, (which is AUD500 million better than the AUD37.1 bln predicted in the May budget) It also anticipates GDP growth shrinking to 2% (from 2.5%) during 2016/17 and a plan for surplus by 2020/21. The deficit is due to peak at 19% of GDP in 2018/19.  Reuters called it a “budget that drips with red ink… with top credit (AAA) rating at risk”. However, S&P Global Ratings later said that the update had no immediate impact on Australia’s AAA rating but warned that they were pessimistic about the government’s ability to close budget deficits and return a balanced budget.

The AUD came under more pressure wit the release of the news, it currently trades at 0.7260 to the USD having been north of 0.7500 only last Wednesday. The EURAUD is up to 1.4377 from a low last week of 1.4090. However it is against the JPY and CHF that the moves today were the most significant with gaps down on the opening trades of the week. Of the two AUDJPY is my preferred pair (even with BOJ meeting today)  and I have a SHORT position form 85.6000 with a short term target 1 at 84.9000 (the 20 DMA) and Target 2 at 82.7600 around the lower Bollinger band, 50 DMA and 38.2 Fibonacci retracement level of the recent move up to north of 87.4000.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Click HERE to register the next webinar will start in:

Stuart Cowell

Market Analyst


Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.