Bias: The NZD/HKD market is currently bullish-to-range-bound, as the New Zealand dollar is slightly above the 90-day average while positioned in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand's recent rate cuts contrast sharply with the steady approach of the U.S. Federal Reserve, placing pressure on the NZD.
• Risk/commodities: A recent decline in global oil prices may keep risk-sensitive currencies like the NZD on the defensive if concerns persist.
• Macro factor: Increased global trade tensions, particularly U.S. tariffs on New Zealand exports, are raising alarm about potential economic impacts on the NZD.
Range: The NZD/HKD is likely to hold steady within its recent range, drifting slowly unless significant developments occur.
What could change it:
• Upside risk: A surprise recovery in demand for New Zealand exports could strengthen the NZD significantly.
• Downside risk: Persistent risk-off market conditions could lead to further declines in the NZD against the HKD.