NZD: NZD Steady Post Slightly Better Than Forecast Q1 GDP

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6 
• RES 1: 141.48/142.95 - High May 2 / High Apr 7
• PRICE: 139.32 @ 16:33 GMT May 19
• SUP 1: 138.77 - 1.0% 10-dma envelope
• SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg   
• SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg

JGBs are trading just above their recent lows and for now, a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal. 

US President Trump has had a two hour conversation with Russian President Putin about the war in the Ukraine. Trump said that he believes that Putin wants peace. While he said that peace talks would begin “immediately”, it remains unclear what the next steps will be, especially as the unconditional 30-day ceasefire was not discussed between the two leaders. Trump followed the discussion by updating European leaders.

• Trump has said that the US is prepared to formulate a “memorandum on a possible future peace agreement” with the Ukraine. While Ukrainian President Zelensky wants the US to remain as one of the negotiating parties, which would also include Europe, but Trump warned there’s a red line on when he’ll walk away if there isn’t progress which he won’t reveal yet.
• Zelensky noted that this was a “defining moment”. A direct meeting with Putin was apparently discussed, according to the Kremlin.
• Putin stated after his call with Trump that their discussion had been “frank, informative and constructive” and that Russia “is ready to work with Ukraine on a memorandum”, which would define “principles of settlement and a timeline for concluding a possible peace agreement” and ceasefire, according to the BBC.
• Putin has previously demanded that Russia keep the territory it has gained during the three years of fighting as well as the rest of the provinces connected with these areas that Russia is yet to occupy. Trump didn’t state if this position had changed.
• In terms of sanctions, Trump thinks they could make the situation worse but that a time may come where they need to be extended, which Zelensky mentioned too.
• Talks took place between Ukraine and Russia in Turkey last Friday but Putin didn’t attend. A prisoner swap was agreed but not a ceasefire. The meeting was followed by intense Russian attacks on Ukraine. 

The NZD had a range overnight of 0.5881 - 0.5933, Asia is trading around 0.5930. US Stocks had an amazing turnaround as the market looks through the US downgrade and the demand from underweight portfolios dictates the direction, the USD though traded very soft across the board.

• (Bloomberg) -- “Finance Minister Nicola Willis commented at a news conference Monday in Wellington. Says the government cannot let debt keep blowing out forever because if it does, it puts future New Zealanders at risk.”
• “Our government has set out a clear strategy to get the debt curve bending down, that’s the responsible course of action and our budget will demonstrate progress towards it”
• The NZD now seems to be comfortable in a 0.5800/0.6050 range and awaits a catalyst to provide the impetus to break-out.
• The support back towards 0.5800 has held very well, and while this continues to hold expect buyers to be around on dips. The first target is the highs just above 0.6000, a break here is needed to regain momentum.
• CFTC Data showed Asset managers continuing to build back their shorts, while the leveraged community continued to reduce their own short.

• Options : Closest significant option expiries for NY cut, based on DTCC data: none, Upcoming Strikes : 0.5705(NZD805.1m May 23), 0.6150(NZD356.1m May 23)

  Fig 1: NZD/USD Spot Hourly Chart

  

  Source: MNI - Market News/Bloomberg