AUD/SBD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Australian dollar's interest rate now exceeds that of the Solomon Islands dollar, making AUD more attractive to investors.
• Risk/commodities: The Australian dollar has seen gains due to increased demand for its commodities, partially driven by consistent economic activity from China.
• One macro factor: Australia's inflation rise has sparked increased expectations for tighter monetary policy from the Reserve Bank of Australia.
Range:
Expect the AUD/SBD to hold within its recent range as both currencies remain stable.
What could change it:
• Upside risk: A further increase in RBA rates could boost the AUD more significantly.
• Downside risk: A decline in global commodity prices could weaken the AUD.