NZD/HKD Outlook:
The NZD/HKD outlook is slightly positive, but likely to move sideways as it is above its recent average and lacks a clear driver.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand is expected to cut interest rates, which could weaken the NZD compared to the HKMA's efforts to maintain currency stability.
- Risk/commodities: High dairy prices are currently supporting New Zealand's export income, providing upward pressure on the NZD.
- One macro factor: Recent trade relations improvements with the U.S. have lifted tariffs on several New Zealand products, positively impacting the NZD.
Range:
The NZD/HKD is likely to hold within its recent trading range, indicating stable movement without significant direction.
What could change it:
- Upside risk: A shift in global risk appetite could favor the NZD, promoting stronger performance.
- Downside risk: If the Reserve Bank of New Zealand proceeds with aggressive interest rate cuts, it could pressure the NZD lower.
