AUD/NZD Outlook:
The AUD/NZD is likely to increase as the rate is currently 2.7% above its recent average and near recent highs. This is supported by the relative interest rate path between Australia and New Zealand, with the RBA maintaining firmer policies compared to the RBNZ.
Key drivers:
• Rate gap: The RBA is expected to hold a firmer policy stance than the RBNZ, which should support the Australian dollar.
• Risk/commodities: Recent surges in global energy prices have bolstered the outlook for Australian energy exports, positively impacting the AUD.
• One macro factor: Upcoming GDP figures from Australia may show strong growth, further supporting the AUD against the NZD.
Range:
Expect the AUD/NZD to drift within its stable 3-month range of approximately 1.14 to 1.20.
What could change it:
• Upside risk: Strong Australian GDP data could trigger further AUD appreciation.
• Downside risk: Continued geopolitical tensions may weigh on both currencies, but particularly on the NZD.