NZD/XPF Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand's potential interest rate cuts may weigh on the NZD compared to the XPF, which has stable monetary policy.
- Risk/commodities: High dairy prices are supporting New Zealand's export income, which is beneficial for the NZD.
- Global trade tensions: Renewed U.S.-China trade tensions could create uncertainty and impact the NZD's strength in the long run.
Range:
The NZD/XPF is likely to test the mid-range of its recent three-month movements and hold steady within the established range.
What could change it:
- Upside risk: A surprising increase in dairy prices or positive global economic news could bolster the NZD.
- Downside risk: Escalating trade tensions may increase volatility and pressure the NZD lower.