AUD/TWD Outlook: The Australian dollar is likely to increase as it is positioned above its recent average and near recent highs, supported by a strong jobs report and expectations of interest rate hikes.
Key drivers:
• Rate gap: The Reserve Bank of Australia's (RBA) potential interest rate hikes boost AUD attractiveness compared to the Taiwanese central bank's steady policies.
• Risk/commodities: High demand for Australian commodities, coupled with rising oil prices, supports the AUD against the TWD.
• Macro factor: China’s uneven economic recovery is affecting demand for Australian exports, particularly iron ore, which could influence AUD strength.
Range: The AUD/TWD is expected to hold within its recent range, with potential volatility as it tests the upper levels.
What could change it:
• Upside risk: A stronger-than-expected inflation report in Australia could prompt quicker rate hikes.
• Downside risk: If geopolitical tensions escalate significantly, it may shift investor focus away from riskier assets like the AUD.