AUD/TWD Outlook:
Slightly positive, but likely to move sideways due to the AUD trading above its recent average but lacking a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia has raised interest rates recently, creating a positive interest differential compared to Taiwan's monetary policy, which remains stable.
• Risk/commodities: Ongoing demand for Australian commodities is supporting the AUD, benefiting from higher prices linked to global economic recovery, particularly from China.
• Trade Optimism: Positive developments in U.S.-China trade negotiations have led to capital inflows into Taiwan, boosting the TWD and contributing to the mixed signals around the AUD/TWD rate.
Range:
Expect the AUD/TWD to hold steady within its recent range, with potential for minor fluctuations depending on economic data releases.
What could change it:
• Upside risk: Increased demand for Australian exports could further strengthen the AUD.
• Downside risk: A deterioration in the trade outlook or economic performance in China could pressure the AUD lower against the TWD.