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NZD Flat, U.S and Canada finalize trade agreement

Published October 2, 2018

The NZD begins the day at similar levels to yesterday despite increased risk appetite across markets, on news of a revised US-Canada Trade deal. The Kiwi has barely moved, with most cross rates also flat apart from the NZD/CAD which has dropped 0.5%.
Not much in the way of local data today, although there will be interest in this morning’s release of Quarterly Survey of Business Opinion results, while tonight there is another GDT Dairy Auction.

New NAFTA Deal

After more than a year of negotiating a new North American Free Trade Agreement, Canada, the US and Mexico have finally inked a trade deal. Foreign Affairs Minister Chrystia Freeland and United States Trade Representative Robert Lighthizer released a joint statement Sunday night announcing the new deal, which will be called the United States-Mexico-Canada Agreement (USMCA). The Canadian Dollar has responded positively being the standout performer of major currencies overnight.

RBA Rate Decision

The RBA are widely expected to keep interest rates unchanged this afternoon at 1.5%. Although recent economic growth and jobs data has been strong, a lack of inflation and wage growth will continue to be of concern for the RBA.

UK and Europe

More Brexit volatility for the GBP, with the Pound receiving a boost on reports that PM Theresa May was going to make a compromise offer to the EU over a back-stop for the Irish border. The EUR has come under some modest downward pressure again due to concerns around Italy after the coalition announced a larger than expected fiscal deficit target late last week.