NZD: Elections impact positive or negative? - ANZ


Analysts at ANZ try to analyse that the potential for a change of Government in New Zealand is going to be NZD positive or negative?

Key Quotes

“Any change would bring tweaks in economic direction but we doubt we’d see substantive changes. But fiscal policy does look set to be less restrictive going by the promises being bandied about, and that’s an area that could bring the RBNZ to the table sooner. That said, it takes time to get control of the fiscal levers so we are really talking about a positive fiscal impulse being delivered in 2019 and 2020. So it’s a coin-toss on the impact. Don’t overlook who New Zealand’s political and fiscal credentials are competing with either.”

“NZD/USD: The market continues to assign a low probability on a hike by the Fed before year-end and is short USDs.  While we can understand the policy and economic direction concerns that are undermining the USD, market perception and positioning is too negatively skewed. The bigger picture is all about the liquidity cycle and that cycle is about to turn. We still favour fading NZD/USD strength.”

Support 0.7250 Resistance 0.7310”

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