Bias: The NZD/MYR pair is bearish-to-range-bound, as it currently sits 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 cut to interest rates contrasts with stability in Malaysia, putting pressure on the NZD.
- Risk/commodities: Oil prices are currently above average, which supports the MYR due to Malaysia's strong export of oil and commodities.
- Foreign Direct Investment (FDI) inflows in Malaysia's technology and green energy sectors are boosting demand for the MYR.
Range: The NZD/MYR is likely to hold within its recent range as it continues to react to prevailing economic signals.
What could change it:
- Upside risk: A shift in global risk appetite could provide temporary support for the NZD against the MYR.
- Downside risk: If trade tensions with the U.S. escalate, the NZD may weaken further due to concerns over export revenues.