- The Five Star movement and League parties have reached an agreement on a government.
- Subdued commodity-FX space relative to the implementation of tariffs so far.
NZD/USD has been consolidating in a previously congested area of support, piercing the 200-4hr SMA at 0.7014 in a relatively subdued commodity-FX space relative to the implementation of tariffs against EU, Mexico, and Canada.
“The ‘will they or won’t they’ on US tariffs has flipped backed to ‘will’. However, there have been only modest currency impacts so far, perhaps as Italy looks as though it has managed to form a more euro-friendly government,” explained analysts at ANZ:
“The kiwi is proving resilient and looks biased higher near-term. However, the extent of cross-currents that exist makes it difficult to believe that any rally will be substantial.”
The Five Star movement and League parties have reached an agreement on a government
Meanwhile, the Italian situation is starting to slip backstage now that it appears that The Five Star movement and League parties have reached an agreement on a government. The latest is that Giovanni Tria is the leading candidate for finance minister, Conte is expected to be Premier and this is excluding the far-right Brothers of Italy, which had campaigned with League in a centre-right alliance, from the team. Conte is expected to be Premier.
For the day ahead, we have Consumer Confidence and the terms of trade as well as the Performance of Manufacturing and PMI indexes in Australia, and China’s manufacturing PMI as data risk in Asia.
NZD/USD levels
Key support is located at 0.6880 while resistance is located at 0.7000, NZD/USD is trading around the 200-month moving average resistance at 0.6994 and weekly technicals remain bearish. Support comes in from the 21-hr SMA while RSIs are biased to the downside although turning slightly higher with this strong short squeeze. A break of the 200-M SMA opens 0.7000 and then 0.7030, early 2017 Dec tops and just above the day’s high of 0.7024. 0.7440 comes as key upside target as the Jan tops. Below 0.6850, 0.6780 comes as next downside target meeting the lows of mid-Nov 2017.
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