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
AUD
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
EUR
German GfK Consumer Confidence (SEP)
8.9
9.0
Low
6:00
CHF
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
EURUSD
1.3082
1.3132
1.3150
1.3182
1.3200
1.3232
1.3282
GBPUSD
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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Source: Daily fx