NZD/CNY Outlook:
The NZD/CNY is slightly positive but likely to move sideways, trading just above its 90-day average and within the mid-range of its recent three-month movement. Market expectations around improved business confidence may lend some support.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand has signaled that any rate hikes are still a way off, while the PBOC is taking measures to stabilize the yuan, impacting the NZD's relative strength.
• Risk/commodities: Fluctuating global commodity prices have contributed to inconsistent export revenues for New Zealand, affecting the NZD’s stability.
• One macro factor: Growing New Zealand exports due to U.S. tariff reductions may positively influence the NZD, offering some buffer against ongoing pressure.
Range:
Expect the NZD/CNY to drift within its recent range, unable to test extremes due to mixed signals.
What could change it:
• Upside risk: A significant rise in business confidence boosting economic outlook could strengthen the NZD.
• Downside risk: Further declines in global commodity prices impacting New Zealand’s export income could weaken the NZD.
