AUD/WST Outlook: Slightly weaker, but likely to move sideways as the rate is near its 3-month average and lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia is expected to raise interest rates, while the Central Bank of Samoa maintains a stable rate to manage excess liquidity.
• Risk/commodities: The recent deterioration in metal prices has pressured the Australian dollar, impacting its strength against the Samoan Tālā.
• One macro factor: Australia’s inflation surge has raised expectations for a rate hike, but potential downside from China’s tariffs on Australian imports is a concern.
Range: The AUD/WST pair is likely to drift within its recent range, given current market conditions.
What could change it:
• Upside risk: A more aggressive rate hike signal from the RBA could bolster the AUD significantly.
• Downside risk: Continued weak metal prices or worsening trade relations with China could further pressure the AUD.