UAE-New Zealand CEPA comes into force

The Comprehensive Economic Partnership Agreement, or CEPA, signed between the UAE and New Zealand in January of this year comes into effect from today, and will likely help boost trade between the two countries. Over 2019 to 2023, bilateral trade averaged around USD 1.5bn annually according to the statement on WAM, and the aim is for this to expand to over USD 5bn a year from 2032. This will be facilitated by the CEPA cutting red tape and trade barriers, with New Zealand providing the UAE 100% duty-free access to goods, and 98.5% of New Zealand products will have duty free access to the UAE. While the trading relationship between the UAE and New Zealand is far from the largest, by building up the number of CEPAs with countries around the world one by one then an increasing proportion of the UAE’s trade will be tariff free, helping the country meet its ambitious growth targets.

Today’s Economic Data and Events

16:30 US initial jobless claims, week to August 23. Forecast: 230,000

Egypt overnight deposit rate. Forecast: 23.00%

Fixed Income

• US Treasuries gained for a second day running yesterday, driven in part by White House pressure on Fed governor Lisa Cook.
• Yields on the 2yr closed down 7bps to 3.6085% while the 10yr yield ended the day at 4.2343%, down 3bps.

FX

• The dollar index closed basically flat yesterday, with little movement on the major pairs for want of any major data releases or economic developments.
• EUR closed down by less than half a basis point at 1.1639, while GBP and CHF both closed up 0.1%, to 1.3498 and 0.8023 respectively. CAD was a notable mover as it added 0.3% against the dollar to close at 1.3791.

Equities

• US equity markets had a positive day yesterday with all three major indices closing up, though there has been some after-market pressure following disappointing tech results.
• The NASDAQ and the S&P 500 both added 0.2% on the day, while the Dow Jones closed up 0.3%.

• Locally, the ADX climbed 0.1% and the DFM ended 0.4% higher. Saudi Arabia’s Tadawul closed down 0.6%.

Commodities

• Oil prices gained on Wednesday as the US introduced additional tariffs on India related to the purchase of Russian energy. Brent futures climbed 1.2% to USD 68.1/b, while WTI added 1.4% to USD 64.2/b.
• Prices have been especially volatile this week, however, and both benchmarks are selling off once more in early trading today.