NZD/WST Outlook:
Slightly positive, but likely to move sideways as the NZD is near its recent average and lacks a clear driver. Current pressures from local trade deficits and mixed employment data are balanced by supportive dairy prices.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand's hawkish stance contrasts with the Central Bank of Samoa's focus on liquidity, creating upward pressure on the NZD.
• Risk/commodities: Recent increases in global dairy prices should positively influence New Zealand's economy, supporting the NZD.
• One macro factor: New Zealand's trade figures show a growing deficit, which could weigh on the NZD in the short term.
Range:
Expect NZD/WST to likely hold within its recent 3-month range, testing mid-values as local economic signals create some volatility.
What could change it:
• Upside risk: A significant improvement in New Zealand's employment data could boost the NZD.
• Downside risk: Continued trade deficits or economic instability in Samoa may lead to depreciation against the WST.
