DAILY FX WRAP: Global politics control direction
Results across the world dictated sentiment, where uncertainty in Germany and New Zealand caused some currency woes.
EUR suffered following the weekend results despite Chancellor Merkel being set for a fourth term. Merkel’s CDU/CSU performed weaker than expected and will now need to undertake coalition discussions, likely set to attempt to form a ‘Jamaica’ Coalition with the FDP and Green Parties, with FDP being an initial hurdle.
EUR/USD rejected 1.20 on Friday, and struggled as Asian trade began, trading through 1.19, now consolidating just above these levels.
EUR/GBP saw similar price action, finding support ahead of September’s lows. A break through the 0.8774 area could see trade once again in the start of 2017’s trading range.
NZD was also heavy following their election results, and in line with Germany, despite a victory for the National Party, a majority was also not secured. This places the next government at the hands of New Zealand First Party’s leader and effective ‘kingmaker’ Winston Peters, who is all too familiar with this obligation having supported both the National Party and main opposition Labour in past governments.
NZD/USD find some support following initial selling pressure, support at September 18th’s low held, with some buying evident around these levels.
AUD/NZD held just through 1.0800, yet continuing to show a downward trend following the stacked offers seen around 1.1150 through September.
Commodity currencies at slightly better levels amid rise in oil prices, in which Brent formed fresh YTD highs and is on course for the highest close since 2015 amid reports that President Erdogan threatened to halt oil exports from Iraqi Kurdistan. Of note, this would roughly impact 550k bpd of Kurdish oil.
25 Sep 2017 - 15:00- Research Sheet- Source: RANsquawk
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