The Australian dollar is higher, having shrugged off the tough federal budget and weaker economic data.

At 0700 AEST on Wednesday, the local currency was trading at 93.59 US cents, up from 93.35 cents on Tuesday.

The Australian dollar had little reaction to the federal government’s budget on Tuesday night, despite expectations that the tough measures announced would push the chance of an interest rate hike out to next year.

The currency also managed to shrug off weaker housing figures from the Australian Bureau of Statistics as well as weaker Chinese data on Tuesday, BK Asset Management managing director Kathy Lien said.

“Last night’s economic reports have not altered the uptrend for the Australian dollar which is benefiting from the decline in US yields,” Lien said.

“The Australian dollar actually had very little reaction to the budget.

“The latest housing market reports should have also been bearish for the Australian dollar.

“At the same time, Chinese retail sales and industrial production growth eased in April, a sign of the slow and uneven recovery in China’s economy,” she said.

Lien said the belt tightening measures contained in the budget would, over the longer term, would be negative for the currency because of the risks they posed to growth.

AAP