NZD: Guided by politics – BBH

New Zealand held elections last month in which New Zealand First support is needed to form the next government and although the ideological affinity is with the governing Nationals, pragmatic consideration, like the deal that can be arranged, may be more important, according to analysts at BBH.  

Key Quotes

“An announcement is expected at the start of the new week.  A center-right government would appear to be what the market is anticipating.  The New Zealand dollar carved a bottom below $0.7000 in the first part of last week, from which it launched an assault on $0.7200 before the end of the week.  This is an important technical area that contains the 20-day moving average and a retracement objective of the election-related leg down since September 20.  The technical indicators are consistent with additional gains, though the $0.7240-$0.7300 may restrain the upside initially.”