Bias: bearish-to-range-bound, as the NZD is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand's recent interest rate cuts have weakened the NZD compared to the more stable monetary policy from the Central Bank of Samoa.
- Risk/commodities: If global oil prices remain low, it might further dampen New Zealand's export revenues, impacting the NZD negatively.
- Global trade tensions: Ongoing U.S. tariffs on New Zealand exports could limit economic growth and contribute to a weaker NZD outlook.
Range: The NZD/WST pair is likely to hold steady in the current lower range but may also drift slightly lower if negative sentiment persists.
What could change it:
- Upside risk: A significant recovery in global demand for New Zealand exports could boost the NZD.
- Downside risk: Increased political instability or economic challenges in New Zealand could exacerbate the NZD's weak position.