Like a caterpillar the Australian dollar has crawled along as it awaits US ­economic data and the Abbott government's first budget.

The Aussie traded flat, hovering around US93.50¢ on Tuesday.

Weaker-than-expected Chinese economic data jolted the Aussie from its pre-budget malaise, albeit briefly.

China's industrial output rose 8.7 per cent in April year-on-year and retail sales rose 11.9 per cent. Economists had forecast 8.9 per cent and 12.2 per cent respectively.

The Aussie dropped about 0.15 cents to the day's low of 93.42 US cents, before heading back towards the tight trading range of 93.5-93.6 cents.

Westpac senior currency strategist Sean Callow expected the federal budget, the first from a new Coalition government since 1996, to hold little sway.

Much of the budget's ''nasty'' parts had been leaked, with the market already pricing in a contraction in the economy, Mr Callow said.

So much so, that traders are betting on the Reserve Bank not to raise interest rates until at least September next year.

The widely tipped ''tough budget'' has also weighed on the bond market, with Australian 10-year yields at their lowest since last September.

''Certainly the Aussie has lost a bit of its yield attraction. Part of that has to be the prospect of a tough budget weighing on growth and just the prospect of an RBA hike seeming so far away,''­­ Mr Callow said.

Yet the dollar remains high, leaping into a higher trading range since last week, following positive domestic jobs numbers and the RBA locking in its neutral stance.

But Mr Callow said that as the local unit approaches US94¢ it was facing ''hard work''.

He said if the budget, as expected, contained no surprises, and S&P and Moody's reaffirmed Australia's AAA credit rating, traders would look to the release of US retail figures in overnight trade on Tuesday. These are expected to show a rise for the third consecutive month.Bit of a flicker

''The question is, when will the US dollar start to actually benefit from the stronger numbers? There is just that little bit of a flicker. In the past week the US dollar has done a little bit better but mostly against the euro, and that's more of a case that the euro is down because of the ECB meeting.''

The euro stabilised near one-month lows against the dollar on Tuesday. But it remains under pressure as investors expect the European Central Bank to try to limit its longer-term strength to boost the euro zone economy.

FXCM market analyst David de Ferranti said upside surprise in the US retail sales could aid the US dollar's slow recovery.

''Optimism about future growth prospects could lead traders to move out of US Treasuries, which would boost 10-year yields and offer some support to the greenback,'' Mr de Ferranti said.

He said the Aussie shrugged off domestic house prices posting their highest growth since June 2010.Mixed cues

''[But] a weaker than anticipated home loans print left the currency with mixed cues. The strength in the housing market remains on the RBA's radar. However, the latest data is unlikely to bolster expectations of action from the central bank to cool house prices.

''A tough federal budget may also put pressure on the Australian dollar over the near term, given the potential headwinds posed to Australian economic growth would likely lead the RBA to delay future rate hikes.''

ANZ head of global markets research Richard Yetsenga said the period of US dollar under-performance was ending as US bond yields base and cyclical equities ''show some life''.

''For some months we have been arguing that the US dollar would correct lower under the influence of, among other drivers, an adjustment lower in US bond yields,'' Mr Yetsenga said.

''It is time to shift stance on that view. We now expect the USD to show some broader strength over coming weeks, at the very least.''

The Aussie traded flat, hovering around US93.50¢ on Tuesday.