NZD/HKD Outlook:
The NZD/HKD is likely to increase as the rate is currently trading above its recent average and is at a higher point within its three-month range. This is supported by New Zealand’s economic factors, particularly in dairy trade and monetary policy.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand's consistent hawkish stance contrasts with the Hong Kong Monetary Authority's interventions to stabilize the HKD.
• Risk/commodities: The recent increase in global dairy prices bodes well for trade prospects, boosting the NZD as dairy is key to New Zealand's economy.
• One macro factor: The ongoing speculation about a potential rate cut from the US Federal Reserve may strengthen the NZD against the HKD.
Range:
The NZD/HKD is expected to drift within the recent trading range, potentially testing higher extremes.
What could change it:
• Upside risk: A significant rise in global commodity prices could further boost the NZD.
• Downside risk: A deterioration in New Zealand's employment figures could lead to NZD weakness.