NZD/SGD Outlook: Bullish, as the rate is significantly above its recent average and near its recent highs due to strong domestic economic indicators in New Zealand.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand's stance on potential monetary tightening contrasts with Singapore's unchanged monetary policy, favoring the NZD.
- Risk/commodities: Rising oil prices have supported broader market confidence, enhancing the attractiveness of the NZD.
- One macro factor: New Zealand's annual consumer inflation surpassed the central bank's target, prompting expectations for rate hikes that could strengthen the NZD further.
Range: The NZD/SGD is likely to hold within its recent range but may test higher levels given current momentum.
What could change it:
- Upside risk: An unexpected change in monetary policy from the RBNZ could bolster the NZD further.
- Downside risk: A shift in global trade dynamics negatively impacting sentiment around the NZD could lead to declines.