NZD/USD Outlook:
NZD/USD is slightly positive but likely to move sideways as it trades above its 90-day average and is near recent highs. However, the lack of a clear driver may limit significant movement.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand (RBNZ) maintains higher rates compared to the US Federal Reserve, supporting demand for NZD.
• Risk/commodities: Oil prices are showing some volatility, but this generally supports the NZD as it is a commodity-linked currency.
• One macro factor: An expected improvement in New Zealand business confidence could provide additional support for the NZD.
Range:
NZD/USD is likely to drift within its recent 3-month range, holding around current levels.
What could change it:
• Upside risk: A significant rebound in China’s economic activity could strengthen demand for NZD.
• Downside risk: Increased geopolitical tensions may push investors towards safe-haven currencies, pressuring the NZD.