AUD/NZD Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a strong driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia's inclination toward potential interest rate hikes contrasts with the Reserve Bank of New Zealand's recent policy easing, favoring the Australian dollar.
• Risk/commodities: The Australian dollar has benefitted from strong commodity prices, especially in iron ore, while the New Zealand dollar faces pressure from global trade tensions affecting export revenues.
• One macro factor: Upcoming inflation data from Australia could reinforce expectations of RBA rate hikes, further impacting the AUD.
Range: Expect AUD/NZD to hold within its recent range, influenced by stable commodity prices and mixed market dynamics.
What could change it:
• Upside risk: A significant increase in Australian inflation could boost the AUD further.
• Downside risk: Greater trade tensions impacting New Zealand's economy could weigh on the NZD, potentially strengthening the AUD/NZD rate.