Bias: The AUD/SBD pair is currently range-bound, as it is near its 90-day average and sits within the middle of its 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of Australia's potential interest rate hikes may draw attention compared to the more stable monetary policy of the Central Bank of Solomon Islands, which is focusing on economic growth.
- Risk/commodities: Recent declines in Chinese inflation raise concerns about demand for Australian exports like iron ore, potentially impacting the strength of the AUD.
- One macro factor: The upcoming Consumer Price Index (CPI) release in Australia is critical, as it could influence expectations about future monetary policy.
Range: The AUD/SBD is likely to drift within its recent 3-month range, reacting to economic updates and risk factors.
What could change it:
- Upside risk: A stronger-than-expected CPI report could boost the AUD significantly.
- Downside risk: Further disappointing economic data from China could weigh on the AUD, pushing the exchange rate lower.