NZD/TWD Outlook:
The NZD/TWD outlook is slightly positive, but likely to move sideways, as it is above its recent average and trading near recent highs without a clear supportive driver for further gains.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand's indication of potential interest rate cuts could widen the gap with Taiwan's more stable monetary policy, impacting the NZD.
• Risk/commodities: High dairy prices are supporting New Zealand’s exports, but broader market volatility and risk-averse behavior could limit NZD gains.
• Global trade tensions: Renewed U.S.-China trade tensions may cause uncertainty, impacting both NZD and TWD performance as risk appetite fluctuates.
Range:
Expect the NZD/TWD to hold within its recent range, drifting gently rather than testing extremes.
What could change it:
• Upside risk: A positive shift in global trade negotiations could boost the NZD and encourage further gains.
• Downside risk: Continued deterioration in risk appetite, particularly impacting commodity prices, could apply downward pressure on the NZD.
