Bias: The current level of NZD/TWD is bullish-to-range-bound, as it is above the 90-day average and within the upper half of the 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand's recent rate cuts contrast with a more stable stance from Taiwan's central bank, making the NZD less appealing.
- Risk/commodities: A cautious market mood increases the vulnerability of the NZD to losses, particularly as trade tensions with the U.S. continue to cloud the outlook.
- One macro factor: Upcoming New Zealand elections could lead to policy shifts that might impact the NZD, adding an element of uncertainty.
Range: The NZD/TWD is likely to hold steady, possibly drifting within the established range, barring any unexpected changes in the broader market.
What could change it:
- Upside risk: A positive shift in trade relationships could boost the NZD significantly.
- Downside risk: Continued risk-off behavior in global markets could pressure the NZD lower.