NZD/TWD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a strong current driver.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand appears more hawkish compared to its Taiwanese counterpart, supporting the NZD.
• Risk/commodities: Recent increases in domestic inflation and consumer confidence are providing some support for the NZD, while increased global risk appetite has also benefited the currency.
• One macro factor: Taiwan's new trade agreement with the U.S. may enhance its economic outlook but brings increased competition for the TWD.
Range: The NZD/TWD rate may hold near current levels as it fluctuates within its recent range.
What could change it:
• Upside risk: A stronger-than-expected inflation report in New Zealand could bolster confidence in further monetary tightening.
• Downside risk: Any deterioration in global risk appetite or news regarding Taiwan's export strength might pressure the TWD against the NZD.