USD/SBD Outlook:
Slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The Federal Reserve's decision to pause interest rate cuts contrasts with the Central Bank of Solomon Islands' ongoing expansionary monetary policy.
• Risk/commodities: With recent oil prices trending lower, there is less upward pressure on USD, influencing the currency negatively.
• One macro factor: The approved SBD 5.6 billion budget indicates a strong commitment to economic transformation, which may support the SBD in the near future.
Range:
Expect the USD/SBD to hold within its recent range, reflecting limited movement given current economic pressures.
What could change it:
• Upside risk: A surprising rebound in US economic data, such as non-farm payrolls, could strengthen the USD.
• Downside risk: Heightened geopolitical tensions or continued weakness in US retail sales may further depress the USD against the SBD.
