German and NZ elections in focus – BBH

In view of analysts at BBH, the days ahead are historic as they suggest that by all reckoning, Merkel will be German Chancellor for a fourth consecutive term.  

Key Quotes

“Many observers expect the election to usher in a new era of German-French coordination that will continue the European project post-Brexit and in the aftermath of the Great Financial Crisis.”

“A reanimated European project is also informed by a sense that America may be a less reliable partner, and a strong Europe is needed to secure the gains of multilateral institutions and the rule of law. Although Kohl also served four terms as Chancellor and oversaw the reunification of Germany, Merkel plays a critical role in shaping Europe.”

“New Zealand holds elections at end the of the week as well.  The German contest does not appear close and the most likely scenario are a return of the Grand Coalition.  However, in New Zealand, the center-right's decade-long rule is being seriously challenged by a resurgent Labour Party.”  

“The New Zealand dollar fell by around 5.7% in August.  The pullback was twice as deep and lasted twice as long the as the correction in the Australian dollar.  However, ahead of the election, the technical tone is constructive, and before the weekend, the Australian dollar posted a downside reversal pattern against the New Zealand dollar.  The Aussie closed below its 20-day moving average against the Kiwi for the first timein two months.  The Kiwi is technically positioned to outperform the Aussie by 3%-5% in the period ahead.”