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Forex - NZD/USD rebounds after milk powder flap

Published 08/05/2013, 09:48 PM
Updated 08/05/2013, 09:49 PM
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Investing.com - The New Zealand dollar rebounded against its U.S. rival during Tuesday’s Asian session a day after the kiwi was hounded by news of contaminated milk powder producer by dairy giant Fonterra.

In Asian trading Tuesday, NZD/USD rose 0.18% to 0.7837. The pair was likely to find support at 0.7732, the low of July 15 and resistance at 0.7982, the high of August 1.

The kiwi was plagued Monday by reports that New Zealand dairy exporter Fonterra found botulism bacteria in some of its products.

New Zealand Trade Minister Tim Groser said on Sunday that China has halted all milk powder imports from New Zealand and Australia following the news. Russia also joined China in halting imports of New Zealand milk powder and other countries are expected to follow suit until the situation is resolved,

Milk powder is one of New Zealand’s largest exports, accounting for 15% of the country’s GDP. The news comes at a tenuous time for the kiwi and the New Zealand economy because Chinese economic growth is slowing. China, the world’s second-largest economy, is one of New Zealand’s top export markets.

In U.S. economic news out Monday, the Institute for Supply Management said its services index climbed to 56 in July from 52.2 in June. Economists expected a July reading of 53. The new orders index rose to 57.7 from 50.8, but the employment index fell to 53.2 from 54.7. Readings above 50 indicate expansion.

Elsewhere, NZD/JPY fell 0.09% to 76.81 while EUR/NZD fell 0.14% to 1.6928. AUD/NZD fell 0.21% to 1.1392 as traders await news from the Reserve Bank of Australia meeting later Tuesday.


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