AUD/WST 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 Australia has raised interest rates to counter inflation, while the Central Bank of Samoa is focused on reducing excess liquidity, creating a supportive environment for the AUD.
• Risk/commodities: Recent trends in oil prices remain above the average, which generally bolsters the value of the AUD due to its commodity currency status.
• One macro factor: Australia’s Consumer Price Index rose unexpectedly, heightening expectations for further interest rate adjustments, influencing the AUD positively.
Range:
The AUD/WST is likely to hold within its recent range as it hovers above the average.
What could change it:
• Upside risk: A stronger-than-expected recovery in consumer confidence in Australia could further boost the AUD.
• Downside risk: A significant decline in commodity prices could weigh on the Australian dollar's strength against the WST.