NZD/XPF Outlook:
The NZD/XPF exchange rate is slightly positive as it trades above its 90-day average and is near the high end of its recent range. Improved business confidence in New Zealand may provide ongoing support for the currency.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand maintains a low Official Cash Rate, while the CFP Franc's stability is linked to French monetary policy, reducing pressure on XPF.
• Risk/commodities: The recent decline in dairy prices may weigh on the NZD, potentially offsetting the boost from US tariff reductions on New Zealand exports.
• One macro factor: Expectations of a rise in New Zealand business confidence could bolster the NZD further.
Range:
The NZD/XPF is likely to hold within its recent range, with minor fluctuations as pressures from commodity prices create volatility.
What could change it:
• Upside risk: A significant increase in global commodity prices could strengthen the NZD.
• Downside risk: A further decline in dairy prices might negatively impact the NZD.