NZD/SBD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand (RBNZ) is poised for potential interest rate cuts, while the Central Bank of Solomon Islands maintains an expansionary policy to support growth.
• Risk/commodities: Recent high dairy prices have uplifted New Zealand's export income, which tends to support the NZD.
• One macro factor: New Zealand's unexpected increase in unemployment has fueled concerns about domestic economic stability, affecting the NZD's strength.
Range:
The NZD/SBD is likely to drift within its recent range as it adjusts to mixed signals.
What could change it:
• Upside risk: A positive shift in global risk appetite could boost the NZD's performance.
• Downside risk: Continued deterioration in the NZ job market could weigh further on the NZD.