AUD/TWD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a decisive driver.
Key drivers:
- Rate gap: The Reserve Bank of Australia's indication of a potential rate hike is currently offset by Taiwan's recent trade agreement with the US, affecting currency flows for the TWD.
- Commodities: The recent slump in commodity prices, particularly precious metals, is putting downward pressure on the Australian dollar, hindering its strength.
- Trade dynamics: China’s weakening manufacturing activity could further dampen demand for Australian exports, which are vital for the AUD.
Range: The AUD/TWD is likely to hold within its recent 3-month range as it has traded quite dynamically between its extremes.
What could change it:
- Upside risk: A surprising increase in commodity prices could boost the AUD.
- Downside risk: Continued strength in the US dollar combined with weak economic data from China could further pressure the AUD.