Economists will be fine-tuning their deficit and economic forecasts this week ahead of Treasurer Josh Frydenberg handing down his delayed October 6 budget for 2020/21.
Mr Frydenberg and Finance Minister Mathias Cormann revealed the starting point for budget calculations on Friday with the final outcome for 2019/20 a record $85.3 billion deficit in response to the pandemic.
That compared with a $5 billion surplus that was forecast in last December's mid-year budget review.
Laying out his budget strategy last week, the treasurer said it was no longer prudent to pursue surpluses in the face of the COVID-19 pandemic.
"It would now be damaging to the economy and unrealistic to target surpluses," he said.
He said the government would continue to provide temporary support until the unemployment rate is comfortably back under six per cent.
AMP Capital chief economist Shane Oliver expects the 2020/21 deficit could be somewhere in the region of $230 billion compared with the $184.5 billion the government was talking about in July.
This he expects will be the result of another hit to revenue assumptions along with an extra $30 billion in stimulus.
Financial market thinking in the past week has been dominated by the Reserve Bank hinting at a further easing in monetary policy, possibly at its next board meeting, which comes just hours before Mr Frydenberg hands down his budget.
"We continue to expect further easing by the RBA ... to present a united 'Team Australia' front with the federal government," Dr Oliver said.
This would involve cutting the cash rate, the three year bond yield target and the Term Funding Facility rate to 0.10 per cent from an already record low of 0.25 per cent.
The speculation sent the Australian dollar reeling from a high of 73.25 US cents at the start of last week, down to a two-month low of 70.06 US cents by Friday.
It looks set to start the week at around 70.30 US cents.
Meanwhile, the share market is on course to extend Friday's sharp rally, with stock futures pointing to a 0.4 per cent gain.
The S&P/ASX200 benchmark index closed 1.5 per cent higher on Friday, buoyed by bank stocks following the federal government's plan to relax rules on borrowing.
The market will get a further lift from a rally in US stocks where the S&P 500 rose 1.6 per cent to 3,298.46, the Dow Jones Industrial Average gained 1.3 per cent to 27,173.96 and the Nasdaq composite climbed 2.3 per cent to 10,913.56.
Among the data due this week, the Reserve Bank will release its monthly credit data for August on Thursday, which will probably show why the government felt compelled to ease borrowing rules.
In July total credit growth was limping along at an annual rate of just 2.4 per cent.
Before then, the weekly ANZ-Roy Morgan consumer confidence index in due on Tuesday - a pointer to future household spending.
As of last week, confidence had risen for three weeks in row, buoyed by ever improving virus numbers in Victoria.
Australian Associated Press