NZD/AUD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a strong driver for a significant shift.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand is expected to adopt a hawkish stance due to rising inflation, suggesting potential interest rate hikes, while the Reserve Bank of Australia remains cautious.
- Risk/commodities: Rising commodity prices are helping to support the Australian dollar, but recent declines in iron ore may limit its strength.
- One macro factor: New Zealand's business confidence has surged, indicating economic growth that could bolster the NZD further.
Range: The NZD/AUD is likely to hold steady within its recent range, occasionally drifting towards the upper or lower limits.
What could change it:
- Upside risk: A surprise interest rate hike from the RBNZ could strengthen the NZD significantly.
- Downside risk: Weaker commodity prices affecting the Australian economy might pressure the AUD down, leading to a potential NZD appreciation.