ASX jumped ahead of 2022 Federal Budget, AUD/USD pulls back from five-month high
The Australian share market jumped ahead as the government’s budget plan unfolds for the upcoming financial year. AUD/USD pulls back after approaching a five-month high the previous day.
What to look out for in the 2022 budget?
Tackling the elevating rising cost and easing the pressure of living for Australians is expected to be a primary focus today. The government is reported to include cash payments and fuel tax cuts for the new financial year. From the macro side, Australia's government is anticipated to offer stimulus aid for the nation's economy and highlight the strong economic outlook to comfort stressed Australians as the next Federal election looms right around the corner.
What are the key implications for the market?
The budget may bring some short-term sweeteners to Australian families and individuals. However, it might do little to ease the prevailing inflation crisis in the nation. Even worse, the market is worrying that the new budget plan would cause more headaches for the central bank. An estimated 30 billion extra spending is expected to add to the formula to further squeeze consumer prices in the short term, including a tightening labour market, soaring petrol costs, and living expenses.
As such, the Reserve Bank of Australia will likely start the rate rising journey sooner and harder. Early this month, the market expected the RBA to lift the historically-low interest rate as early as June.
ASX technical
The Australian share market has continued to gain this week, with the index jumping up more than 8% from the March low. The price is now approaching the highest level reached since last October. The next target for the ASX 200 will be the December high around 7553, which, if broken through, will likely bring the index to its highest level in 2022.
Technically, support can refer to the ascending trend line connected from the March low, from which, we will look at the level around 7428 for the near term. The mid-term momentum for the Australian stocks seems to remain bull-biased, as all three key moving averages point to a positive outlook.
AUD/USD technical
AUD/USD pulled back from its five-month high this week due to the strength of the greenback. The pressure from the critical resistance level is likely to be another reason if looking from a technical point of view. Referring to the daily chart, the support level for the near-term retreat can be found at $0.7400, where the current 20-day moving average sits. Any rebound from this level can be viewed as continuing the bull-biased trend. However, a broken-through from $0.74 will breach the trend line shown in the weekly chart, suggesting a risk of momentum overturn might be on the cards
AUD/USD technical
Follow Hebe Chen on Twitter @BifeiChen
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