The Australian dollar pared gains on Wednesday after steep cuts to the government's growth and budget surplus forecasts and weak economic data reinforced a grim outlook for the domestic economy. In its mid-year review of budget forecasts.
The government said growth would slow to 2.0 percent in the year to June 2009 from a previous forecast of 2.75 percent, largely because of the global financial crisis.
The budget surplus for the year to June 2009 was now projected to be just A$5.4 billion ($3.8 billion) in 2008/09, from an original forecast of A$21.7 billion as the slowdown slashes state revenue. Separate data showed building approvals slumped 7.2 percent in September. "The economic data, especially the buildings approval data, was quite bad," said Joseph Capurso, currency strategist at Commonwealth Bank.
"The cutting of growth forecasts show the economy has entered a soft patch and with the global economy set for a sharp slowdown, we would see the Aussie ease from here." The Aussie was at $0.6888, off a two-week peak of $0.7015 in offshore trade but up from $0.6638 late here on Tuesday when it fell after the Reserve Bank of Australia's (RBA) announced a bigger-than-expected rate cut.
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