NZD/TWD Outlook:
The NZD/TWD exchange rate is currently above its recent average and is trading near recent highs, giving a bullish outlook. This position is bolstered by ongoing support from commodity price trends.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand keeps interest rates higher than Taiwan's central bank, providing stronger support for the NZD.
• Risk/commodities: Recent increases in global dairy prices positively impact New Zealand's economy, strengthening the NZD against the TWD.
• One macro factor: Market speculation about potential rate cuts from the US Federal Reserve could further improve the NZD, influencing its performance against the TWD.
Range:
The NZD/TWD is likely to drift upward within the recent 3-month range, potentially testing the upper extremes if current trends continue.
What could change it:
• Upside risk: A stronger-than-expected rebound in global dairy prices could drive the NZD higher.
• Downside risk: A significant deterioration in New Zealand’s trade figures could pressure the NZD lower against the TWD.