Australian Dollar Holds Ground Following Budget Announcement
The Australian Dollar (AUD) remained steady after Australian Treasurer Jim Chalmers presented the 2025/26 budget and the Treasury's key economic forecasts before Parliament on Tuesday, including new tax cuts, with two rounds totaling approximately A$17.1 billion.
Australia's budget deficit is projected at A$27.6 billion for 2024-25 and A$42.1 billion for 2025-26. Australia's GDP is expected to grow by 2.25% in fiscal year 2026 and 2.5% in fiscal year 2027. The tax cuts are likely aimed at bolstering political support.
The AUD finds support as investors anticipate the Reserve Bank of Australia (RBA) keeping interest rates unchanged in April, following its first rate cut in four years in February. Additionally, expectations of Chinese stimulus continue to bolster the Australian economy, given the strong trade ties between the two nations.
Still, the risk-sensitive AUD/USD pair could face potential headwinds as traders remain cautious amid uncertainty over US President Donald Trump's tariff announcement scheduled for April 2. While Trump hinted that "a lot" of countries could receive exemptions, the details of his administration's tariff plans remain unclear.
Source: FXStreet
