NZD/SBD Outlook:
The NZD/SBD is likely to increase as it is trading above its recent 90-day average and is near recent highs. The forecast for improved business confidence in New Zealand could support further strength in the kiwi.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand's stable policy contrasts with the expansionary approach of the Central Bank of the Solomon Islands, creating a favorable environment for the NZD.
• Risk/commodities: With global commodity prices declining, New Zealand may face headwinds in its export income, impacting the NZD's performance.
• Macro factor: New Zealand's business confidence forecast is expected to improve in February, providing a potential boost to the NZD.
Range:
The NZD/SBD is likely to drift within its recent range, potentially testing the upper extremes.
What could change it:
• Upside risk: A surprise increase in global commodity prices could support the NZD's strength.
• Downside risk: If business confidence unexpectedly declines, it may hinder the NZD's upward trajectory.
