AUD/NZD Outlook: Slightly positive, but likely to move sideways, as the rate is just above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Reserve Bank of Australia's (RBA) signals of potential interest rate hikes due to rising inflation could support the AUD against the NZD.
- Risk/commodities: Declines in commodity prices may weigh on the AUD, while New Zealand's stronger business confidence bolsters the NZD, creating a balancing effect.
- One macro factor: New Zealand's annual consumer inflation has surged beyond the Reserve Bank of New Zealand's (RBNZ) target, sparking speculation of interest rate changes.
Range: The AUD/NZD is likely to hold steady within its recent range, showing limited volatility.
What could change it:
- Upside risk: A stronger-than-expected inflation report from Australia, prompting immediate RBA action.
- Downside risk: A continued decline in commodity prices, adversely impacting the Australian economy.