AUD/WST Outlook:
The AUD/WST exchange rate is likely to increase as it currently trades significantly above its recent average and near recent highs. The strength of the Australian dollar is bolstered by domestic inflation pressures and expectations of further interest rate hikes.
Key drivers:
• Rate gap: The Reserve Bank of Australia's recent interest rate hike contrasts with the more stable approach of the Central Bank of Samoa, enhancing AUD appeal.
• Risk/commodities: Strong global demand for commodities like gold, coupled with potential volatility in oil prices, supports the value of the AUD against the WST.
• Macroeconomic factor: The RBA highlighted ongoing inflation risks, suggesting that another rate hike is on the horizon, further strengthening the AUD.
Range:
Expect the AUD/WST to hold at current levels as it moves within its recent range, with potential tests of the upper extremes.
What could change it:
• Upside risk: An unexpected announcement of further interest rate hikes by the RBA could propel the AUD higher.
• Downside risk: Political uncertainty from the upcoming Samoan by-elections might negatively impact the WST, influencing the exchange rate.
