- A deficit of $A19.4 billion for 2012/2013 (going into the announcement expectations were for around $A17bn)
- Deficit of $A18 billion in 2013/14 ($A11bn expected)
- Economic growth outlook downgraded to 2.75 per cent in 2013/14 (3% previously)
- Unemployment rate could reach 5.75 per cent in 2013/14
- Net $A43bn of tax hikes and spending cuts, over the next 4 years
AUD marked down on the session after the announcement and extended below 0.9900 in New York
Support for AUD has largely been from yield-chasing buyers, those seeing growth in non-mining related sectors of the economy, and those looking for an improvement in China. These factors have taken a back seat to concerns over commodity price falls, China slowdown, capex flows peaking, those not seeing much of a transition into non-resource extraction areas of the economy, and subsequent potential further cuts in interest rates. Overlaying all of the concerns has been the broad USD strength since late last week, which has hurried the AUD decline.
Where to from here? Well, I’ve just listed the factors to watch, and for now AUD is a sell on rallies. I’ll be back with orders and levels.