Bias: The NZD/FJD outlook is bullish-to-range-bound, as the New Zealand dollar is currently above the 90-day average and sits in the upper half of the 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand is easing its policy, while the Reserve Bank of Fiji maintains a stable approach, widening the interest rate disparity.
- Risk/commodities: A cautious market mood has left the New Zealand dollar vulnerable, reflecting lower risk appetite that affects its performance.
- Macro factor: The upcoming general election in New Zealand could introduce changes in fiscal policy, impacting the NZD’s trajectory.
Range: The NZD/FJD is likely to hold steady within its recent 3-month range, although it may drift cautiously as uncertainties persist.
What could change it:
- Upside risk: A strong recovery in global trade may boost demand for New Zealand exports, supporting the NZD.
- Downside risk: Persistent risk-off conditions or poor economic data could weigh further on the New Zealand dollar.