AUD/TWD Outlook: The outlook is likely to increase, as the rate is well above its 90-day average and near recent highs, supported by expectations of interest rate hikes in Australia.
Key drivers:
• Rate gap: The Reserve Bank of Australia's indications of potential rate hikes contrast with more stable policies from Taiwan's central bank, supporting a stronger AUD.
• Risk/commodities: Current oil prices are volatile, and since AUD is a commodity currency, significant fluctuations can impact its strength against the TWD.
• One macro factor: Upcoming Australian inflation data could further enhance AUD performance if it shows rising prices, reaffirming the case for rate increases.
Range: The AUD/TWD rate is expected to hold its ground within the recent range as it trades at multi-year highs.
What could change it:
• Upside risk: A larger-than-expected increase in Australia's inflation could lead to more aggressive interest rate bets, further boosting AUD.
• Downside risk: Any significant deterioration in global markets or commodity prices could hurt AUD's position, leading to a potential decrease against TWD.