AUD/NZD Outlook: Likely to move sideways, as the exchange rate hovers near its 90-day average while lacks strong directional drivers.
Key drivers:
• Rate gap: The Reserve Bank of Australia is considering a rate hike due to rising inflation, while the Reserve Bank of New Zealand has already signaled a more hawkish stance with increasing inflation expectations.
• Risk/commodities: Recent volatility in global commodity prices may weigh on the AUD, but overall higher commodity demand supports the currency.
• One macro factor: New Zealand's business confidence has reached a high not seen in over a decade, which may bolster the NZD further.
Range: Movement is expected to hold steady within its recent 3-month range, maintaining stability just above its average.
What could change it:
• Upside risk: A more aggressive rate hike from the RBA could lead to AUD appreciation.
• Downside risk: A significant decline in commodity prices might pressure the AUD lower against the NZD.