NZD/TWD Outlook: The New Zealand Dollar is likely to increase, supported by its position well above the recent average and near recent highs.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand has cut rates significantly, contrasting with Taiwan's central bank's stable approach, providing NZD an upper hand.
• Risk/commodities: Oil prices remain above average, which can support the NZD due to its commodity-exporting nature, especially related to agricultural products.
• One macro factor: New Zealand's economic contraction highlights vulnerabilities, but ongoing global trade recovery may help stabilize NZD performance.
Range: Expect NZD/TWD to drift upwards within its 3-month range, driven by positive market conditions.
What could change it:
• Upside risk: A rebound in New Zealand’s economic data could enhance NZD strength.
• Downside risk: Renewed trade tensions or aggressive RBNZ rate cuts may pull the NZD lower.