NZD/WST Outlook:
Slightly positive, but likely to move sideways, as the NZD trades above its recent average but faces mixed signals.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand is considering interest rate cuts, while the Central Bank of Samoa aims to manage excess liquidity, contributing to differing monetary policies.
- Risk/commodities: Recent high dairy prices have strengthened New Zealand's export income, providing support for the NZD amidst overall market uncertainties.
- One macro factor: Increased tariffs from renewed U.S.-China trade tensions impact global supply chains, affecting the NZD's performance.
Range:
The NZD/WST is likely to drift within its recent range, showing stability but limited upward movement.
What could change it:
- Upside risk: A positive shift in global risk appetite could lead to renewed strength in commodity prices, boosting the NZD.
- Downside risk: Continued labor market concerns in New Zealand may exert downward pressure on the NZD, especially if coupled with soft economic data.
