SYDNEY/WELLINGTON: The Australian and New Zealand dollars held gains versus their US counterpart and euro on Tuesday, with markets awaiting Chinese data and the Australian government's annual budget expected to be the toughest in 20 years.
The Aussie was steady at $0.9354, not far from a one-month peak of $0.9395 set on Thursday. Support was seen at $0.9334, the 50 percent retracement of the April-May fall, with resistance around $0.9400.
It hovered near one-month highs against the euro which has been on the defensive since the head of the European Central Bank last week opened the door to further easing at its June meeting.
The euro last stood at A$1.4702 and a break below A$1.4644 would take it to the lowest since November. Against the kiwi, it was last at NZ$1.5945, not far from a one-month low of NZ$1.5863 set last week. Investors are waiting for the Australian government to release its annual federal budget at 0930 GMT with expectations of an around A$46 billion deficit this year and A$30 billion for 2014/15.
The Liberal coalition government warned of cuts in welfare and new taxes aimed at returning the budget to surplus within a decade.
It is also anticipated to spend more than A$40 billion on roads over the next six years, to be topped up by some A$42 billion from state governments and private investors.
The budget outcome usually doesn't move markets as it is likely to keep intact the view the Reserve Bank of Australia (RBA) will hold interest rates steady at a record low of 2.5 percent. Swap markets see a 50/50 chance of a rate hike on a 12-month horizon.
Peter Dragicevich said it was rare to see a long-lasting effect on the Aussie following the annual budget and sees more chances of a reaction after China releases a raft of data later in the session. China's industrial output and fixed assets investment is expected to have stabilised in April.
Retail sales growth is also seen flat from March at 12.2 percent.
The Antipodean currencies are sensitive to news out of China, a key export market to both Australia and New Zealand. The New Zealand dollar consolidated at $0.8624, having touched a one-week low of $0.8604 on Friday.
Near-term support remains around $0.8610/15 and below that more substantially at the 50-day moving average of $0.8592, with any lift towards $0.8670 likely to see sellers emerge.
The cross rate against the Aussie may see some action after the Australian budget.
The Aussie was sitting at NZ$1.0843 .
Locally, investors are looking to the Reserve Bank of New Zealand's financial stability report (FSR) and first quarter retail sales on Wednesday. The FSR may see the bank reiterate last week's rhetoric on the currency and house prices, which prompted a dip in the currency on hints the central bank may be less aggressive in raising interest rates.
Market pricing implies an 83 percent chance of a 25-basis- point rise by the RBNZ next month, with 87 basis points of hikes seen over the coming year.
New Zealand government bonds were mixed with a hint of a bid tone in early dated paper, but a slight offered tone at the long end with yields a couple of ticks higher.
Australian government bond futures were a touch softer, with the three-year bond contract down a tick at 97.120. The 10-year contract eased two ticks to 96.155, having touched a nine-month peak on Monday.
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