NZD/SBD Outlook: The New Zealand dollar is likely to increase, supported by its position above the recent average and near recent highs.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand has cut interest rates, while the Central Bank of Solomon Islands maintains an expansionary policy, which favors the NZD.
- Risk/commodities: Improved market mood is supporting commodity prices, beneficial for currencies like the NZD that are closely linked to commodity exports.
- Macro factor: Ongoing U.S. trade tensions impact New Zealand exports, creating uncertainty that may weigh on NZD strength.
Range: The NZD/SBD is likely to test recent highs with some fluctuations around this elevated level.
What could change it:
- Upside risk: A stronger rebound in New Zealand's economic data could further support the NZD.
- Downside risk: Any escalation in U.S. tariffs on New Zealand exports might pressure the NZD lower.