Aussie Soft After Budget Forecast
The Australian dollar was soft today after the government forecast that economic growth will slow in the next financial year, adding reasons for the central bank to cut interest rates further.
The Australia Treasury revealed the budget for the 2013–14 financial year today. It predicted that growth of real gross domestic product will slow to 2.75 percent from the current year’s 3 percent. Unemployment is projected to edge up from 5.5 percent to 5.75 percent. The Consumer Price Index may grow 2.25 percent in the next financial year, slower than this year’s 2.5 percent.
The predictions add incentive for the Bank of Australia to ease its monetary policy even more. Such prospect weakened the Aussie (as the Australian currency is nicknamed), but as of now the currency attempts to rebound as the recent drop was perhaps too big and too fast.
AUD/USD fell from 0.9951 to 0.9875 before trading at 0.9901 as of 23:54 GMT today. EUR/AUD was flat at 1.3059 after rising to 1.3117 — the highest rate since February 12. AUD/JPY was down to 100.65, but rebounded to trade near the opening level at 101.20.
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