NZD/AUD Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and lacks a clear driver for immediate upward movement.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand is easing its monetary policy while the Reserve Bank of Australia signals potential rate hikes, widening the interest rate differential in favor of the AUD.
- Risk/commodities: Ongoing high metals prices and resilience in the AUD are supporting its strength against the NZD, while the latter faces concerns over its shrinking private sector.
- One macro factor: The upcoming Australian Consumer Price Index (CPI) release could further influence the AUD, especially if it shows rising inflation expectations.
Range: The NZD/AUD is likely to hold within its recent range as both currencies respond to mixed domestic data and global influences.
What could change it:
- Upside risk: Stronger-than-expected Australian economic indicators might boost the AUD even further.
- Downside risk: Any significant worsening in New Zealand's economic outlook could weaken the NZD, pushing the pair lower.
