Australia’s Treasurer Jim Chalmers will unveil the annual budget for FY23-24 later today (7.30pm AEST), which is expected to deliver the first surplus in 15 years. At the margin, a surplus is positive for AUD given its US counterpart runs a deficit. However, for it to have a sustainable impact on AUD, the surplus would need to turn into a trend, rather than a one-off case.
To be sure, while conditions are getting ripe for a meaningful rebound in AUD/USD, it may be too soon to call an end to AUD’s global decline, especially against EUR and GBP.
As the colour-coded candlestick charts based on trending/momentum indicators show, the setback since the start of the year is consolidation within the uptrend since October, and not the start of a downtrend (see colour-coded candlestick charts based on trending/momentum indicators).
AUD/USD held crucial support on a horizontal trendline from November at about 0.6585.
The subsequent “V”-shaped rebound gives an impression that the pair could be gearing up for a break above the immediate ceiling at the mid-April high of 0.6805. Such a break could open the door toward the mid-February high of 0.7025.
