USD continued to claw back lost ground, political concerns elsewhere - ANZ

Analysts at ANZ noted that the USD continued to claw back lost ground as the DXY rallied in the aftermath of the German election results, which have raised question marks over what the new Government’s appetite for deeper EU integration will be.

Key Quotes:

"At the moment in Europe, outside of the euro, there is very little evidence of heightened EU uncertainty in markets: peripheral bond spreads are showing no signs of panic and equity markets are holding up well. It may well be months before a new German government is formed and has often been the case in the past, election pledges made during the campaign can be watered down.

What is important to watch is the Free Democrats’ position on Europe and whether or not they tone down their resistance to deeper EU integration.

Meanwhile in New Zealand it looks like being a long haul before a new Government is formed, but cards are likely to be played close to chests in the meantime, giving the NZD little to work with. However, we suspect we may see a few wobbles in the near-term dataflow as the economy transitions between growth drivers."