NZD/CNY Outlook: Bullish, as the pair is at recent highs and trading significantly above the 90-day average due to NZD strength in positive market conditions.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand has recently cut rates, while the People's Bank of China is focused on stabilizing the yuan, creating a supportive environment for the NZD against the CNY.
• Risk/commodities: The ongoing recovery in oil prices has bolstered overall confidence in commodity-exporting nations like New Zealand, boosting demand for the NZD.
• Macro factor: Expectations regarding U.S. monetary policy, with potential rate cuts, may influence flows away from USD, benefiting currencies like the NZD as trade tensions ease.
Range: The NZD/CNY is likely to hold steady within its recent range, considering support from positive developments but potential headwinds due to local economic concerns.
What could change it:
• Upside risk: Improvement in New Zealand's economic indicators, particularly in exports or business confidence, could drive the NZD higher.
• Downside risk: Any escalation in global trade tensions or negative surprises in New Zealand’s economic data could weaken the NZD further.