Global macro overview for 25/09/2017

Global macro overview for 25/09/2017:

After receiving the biggest vote over the weekend, New Zealand's Prime Minister, Bill English is claiming the right to form the next government, but with the National Party's share of the vote only 46%, and only 58 seats in the 120 seat parliament, it looks as if he will need to form a coalition. The previous minority government worked with a supply agreement with the ACT (1 seat), but the arithmetic for this no longer works with the loss of one of the National Party's seats. So now, the most obvious choice for Bill English, would be a tie-up with the New Zealand First Party, which most known for its anti-immigration stance (they won 7.5% of the votes delivering 9 seats (down from 12)). Nevertheless, such a deal is by no means a certainty, and Jacinda Ardern, Labour's leader (Labour got 35.8% of the vote), is not giving up. A three-way coalition including the Greens cannot be ruled out. Labour's vote share delivered 45 seats, a rise of 13 seats taken broadly from all other parties, but in particular the Green Party, which lost 7 seats leaving it with 7 remaining.

In conclusion, political uncertainty is the only sure outcome over the coming weeks as coalition talks continue, which is likely to weigh on the NZD in the meantime as the markets do not like uncertain times.

Let's now take a look at the EUR/NZD technical picture at the H4 time frame. The market is moving inside of a parallel channel and the recent attempt to break out from it looks fake. The most importantly technical support is still the 38%Fibo at the level of 1.6130 as any violation of this level would immediately lead to the test of the level of 1.6000 and 50% Fibo at 1.5958.

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