AUD/TWD Outlook:
The AUD/TWD pair is currently bullish, trading 4.1% above its recent average. Market dynamics show strong support for the Australian dollar due to favorable economic conditions.
Key drivers:
• Rate gap: The Reserve Bank of Australia has recently raised interest rates, which is more aggressive compared to Taiwan's stable monetary policy.
• Risk/commodities: The ongoing recovery in global commodity prices is benefiting the AUD as Australia is a key exporter.
• One macro factor: Strong export performance from Taiwan's ICT sector is supporting the TWD, although it faces competition from a stronger AUD.
Range:
Expect the AUD/TWD to drift within a volatile range, possibly testing its recent high.
What could change it:
• Upside risk: A further increase in Australian inflation could prompt additional rate hikes, strengthening the AUD.
• Downside risk: A shift in global risk appetite towards safe havens could weaken the AUD against the TWD.