USD/SBD Outlook: Likely to decrease, as the rate is below its recent average and near recent lows.
Key drivers:
- Rate gap: The Federal Reserve is expected to cut interest rates, while the Central Bank of Solomon Islands maintains an expansionary policy, creating a wider gap that can weaken the USD.
- Risk/commodities: Increased volatility in the US dollar due to tariff concerns could impact its value negatively against the SBD.
- One macro factor: The recent approval of a substantial budget in the Solomon Islands aims to stimulate growth and maintain low inflation, strengthening the SBD.
Range: The USD/SBD is likely to drift within its stable range, facing pressure at the lower end.
What could change it:
- Upside risk: A sudden improvement in US labor market data might bolster the USD.
- Downside risk: Escalating geopolitical tensions could lead to further weakness in the USD.
