Bias: Bearish-to-range-bound, as the NZD is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand's recent rate cut contrasts with the People's Bank of China's stabilization efforts for the yuan, affecting the NZD/CNY exchange rate.
• Risk/commodities: Oil prices remain volatile but have recently trended below average, impacting the risk-sensitive NZD negatively.
• Global trade tensions: Ongoing U.S. tariffs on New Zealand exports are raising concerns over trade revenues, further pressuring the kiwi.
Range: The NZD/CNY exchange rate is likely to hold within the current range, which has shown stability over recent months.
What could change it:
• Upside risk: A recovery in global demand could boost New Zealand's export revenues, supporting the NZD.
• Downside risk: Continued risk-off trading behavior could further weaken the NZD against the CNY.