AUD/SBD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driving factor.
Key drivers:
• Rate gap: The Reserve Bank of Australia’s rate hikes are aimed at countering inflation, while the Central Bank of Solomon Islands maintains an expansionary approach for growth.
• Risk/commodities: The recent strength in commodity prices, specifically iron ore, supports the Australian dollar amidst wavering global risk appetite.
• Macro factor: Australia’s inflation rate surpassing the RBA's targets raises expectations for further monetary tightening, which could bolster the AUD.
Range:
Expect the AUD/SBD to hold within its recent range, as recent gains may stabilize without distinct new developments.
What could change it:
• Upside risk: A stronger-than-expected improvement in consumer confidence in Australia could elevate the AUD.
• Downside risk: A significant drop in commodity prices or negative global economic developments could weaken the AUD against the SBD.
