Talking Points:
- NZ Dollar Outperforms as Upbeat Dairy Exports Bets Bolster RBNZ Outlook
- Canadian Dollar Gains on M&A Flows After Burger King, Tim Hortons Deal
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The New Zealand Dollar outperformed in overnight trade, rising as much as 0.4 percent on average against its leading counterparts. The move followed the announcement of a partnership between dairy giant Fonterra and Chinese baby food manufacturer Beingmate to produce infant formula. Fonterra also said that despite “difficult market conditions” and lingering “downside risks”, its expected farm-gate milk price forecast remains unchanged at NZ$6/kg for the 2014-15 season.
China is New Zealand’s second-largest trading partner and dairy products account for close to 30 percent of island nation’s cross-border sales. With that in mind, traders likely interpreted supportive news-flow from the largest player in a formative sector of the economy as positive for growth trends as a whole. In turn, stronger overall performance may push the RBNZ off the sidelines and back into its rate-hike cycle sooner than otherwise expected, fueling capital inflows into the Kiwi.
The Canadian Dollar likewise advanced after US-based Burger King Worldwide Inc said it will buy Canada’s Tim Hortons Inc for US$11 billion, implying on-coming M&A capital flows favoring the Loonie in the pipeline. The deal’s supportive implications appear to run deeper however, with the mammoth transaction seemly representing a broadening “inversion” trend wherein US corporates seek to re-domicile abroad to take advantage of favorable tax policies.
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Asia Session
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
22:45 |
NZD |
Food Prices (MoM) (JUL) |
-0.7% |
- |
1.4% |
1:30 |
Construction Work Done (2Q) |
-1.2% |
-0.5% |
-0.4% |
|
1:45 |
CNY |
Westpac-MNI Consumer Sentiment (AUG) |
113.3 |
- |
114.8 |
European Session
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
6:00 |
German GfK Consumer Confidence (SEP) |
8.9 |
9.0 |
Low |
|
6:00 |
UBS Consumption Indicator (JUL) |
- |
2.06 |
Low |
|
6:00 |
EUR |
German Import Price Index (MoM) (JUL) |
-0.1% |
0.2% |
Medium |
6:00 |
EUR |
German Import Price Index (YoY) (JUL) |
-1.4% |
-1.2% |
Medium |
6:45 |
EUR |
French Business Confidence (AUG) |
93 |
93 |
Low |
6:45 |
EUR |
French Manufacturing Confidence (AUG) |
96 |
97 |
Low |
8:00 |
EUR |
Italian Consumer Confidence Index (AUG) |
104.0 |
104.6 |
Low |
Critical Levels
CCY |
Supp 3 |
Supp 2 |
Supp 1 |
Pivot Point |
Res 1 |
Res 2 |
Res 3 |
1.3082 |
1.3132 |
1.3150 |
1.3182 |
1.3200 |
1.3232 |
1.3282 |
|
1.6448 |
1.6503 |
1.6522 |
1.6558 |
1.6577 |
1.6613 |
1.6668 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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