AUD/NZD Outlook:
The AUD/NZD rate is likely to increase as it is trading significantly above its recent average and is at a 90-day high. Support for the Australian dollar comes from expectations of further rate hikes, while the New Zealand dollar remains constrained by its central bank's cautious stance.
Key drivers:
• Rate gap: The Reserve Bank of Australia (RBA) is adopting a more aggressive monetary policy compared to the Reserve Bank of New Zealand (RBNZ), which keeps rates steady.
• Risk/commodities: Recent increases in global commodity prices benefit the AUD, while persistent dairy price declines weaken the NZD.
• Macroeconomic factor: Australia's inflation concerns, with recent data indicating higher-than-expected figures, bolster the likelihood of further interest rate increases from the RBA.
Range:
The AUD/NZD rate is expected to hold within its recent range, though there may be upward pressure as it approaches the higher end.
What could change it:
• Upside risk: A surprise rate hike from the RBA could propel AUD/NZD higher.
• Downside risk: A sudden decrease in commodity prices or negative economic data from Australia could shift momentum towards the NZD.
