Bias: The AUD/TWD pair is bullish-to-range-bound, currently above the 90-day average and within the upper half of the 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of Australia's signals regarding potential interest rate hikes could support the Australian dollar against the Taiwanese dollar.
- Risk/commodities: Recent trends show oil prices remaining volatile, which can impact demand for Australian commodities, thus affecting the AUD/TWD exchange rate.
- One macro factor: Weaker-than-expected Chinese inflation figures have raised concerns about subdued demand for Australian exports, providing downward pressure on the AUD.
Range: The AUD/TWD exchange rate is likely to hold or drift within its recent 3-month range, as external pressures and local dynamics balance out.
What could change it:
- Upside risk: A strong recovery in Chinese economic data could boost demand for Australian exports, strengthening the AUD.
- Downside risk: Any signs of aggressive policy shifts by Taiwan's central bank could lead to a stronger TWD, putting pressure on the AUD.