NZD/USD Outlook:
Slightly positive, but likely to move sideways as the New Zealand dollar is above its recent average but lacks a clear driving force.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is hinting at potential interest rate cuts while the Federal Reserve is maintaining current rates, impacting the NZD's relative value.
• Risk/commodities: High dairy prices are supporting the New Zealand currency, which benefits from its strong export sector.
• One macro factor: Ongoing labour-market concerns in New Zealand, following an unexpected rise in unemployment, continue to cloud the outlook.
Range:
Expect the NZD/USD to hold steady within its recent 3-month range, as mixed signals may limit movement.
What could change it:
• Upside risk: A positive shift in risk appetite driven by upcoming central bank policy statements could favor the NZD.
• Downside risk: Further deterioration in New Zealand’s employment situation could weigh on the NZD, prompting a pullback.
