Here's my summary of the key news the weekend in 90 seconds at 9 am, including news the New Zealand dollar surged higher at the close last week and opens today at US$0.81 and the TWI is at 72.9. These are the highest levels in more than three months and represent a 3% rise just since Wednesday. The New Zealand dollar was last at these levels in early May and since then commodity prices have fallen 18%.
Stock and commodity markets rallied on Friday, boosting appetites for riskier assets such as the New Zealand dollar.
The reason is that EU politicians have been getting behind Mario Draghi, endorsing his "whatever it takes" plan to save the euro.
Markets are expecting this 'pledge' will involve the European Central Bank or European rescue funds buying Spanish and Italian bonds, but the Bundesbank remains opposed to such a plan.
Over the weekend German leader Angela Merkel, France's Francoise Hollande and Italy's Mario Monti all threw their weight behind the pledge by Draghi to protect the euro with decisive action, a crucial endorsement for the ECB's buying of beleaguered nations' bonds.
Yields on Spanish bonds declined as market participants bet the ECB will now be a big buyer. The ECB is coming to the rescue of those bond traders brave enough to still be holding Spanish - and Italian - sovereign bonds. Of course, most holders will be local banks who have been mandated to hold them, so in effect this is support for the local banking systems.
But remember, the deal plan has been signalled; it hasn't been actioned and there is plenty that could go off the rails yet. There is another EU summit on Friday, and lingering unease among northern EU countries remains.
Meanwhile in America, annualised GDP growth slowed to 1.5% in the June quarter from 2% in the March quarter and remains too slow to pull unemployment down. Markets are now expecting the US Federal Reserve will announce new easing measures as early as this Thursday New Zealand time that could include a third round of money printing known as Quantitative Easing III.
Closer to home, the Australian is reporting BHP will delay approval of its US$33 billion plan to expand its Olympic Dam copper-uranium-gold mine in South Australia by two years as commodity prices fall and Chinese economic growth slows.
It also looks like Ford will soon announce that it is to quit manufacturing cars in Australia, winding up in 2016. The high Australian dollar and slowing Australian consumption growth are being blamed. Ford's Falcon and Holden's Commodore have struggled to compete against cheaper imported and more fuel efficient cars such as the Mazda 3.
Back in New Zealand, the NZHerald reported 250,000 Auckland households will shortly receive rates bills under the new amalgamated 'Super City' Auckland Council with rates increases averaging 8.1%.
8 Comments
FORD to quit Australia , surely not ! ..... it was only 6 months ago that PM Julia Gillard paid $A 34 million for a photo-op with Ford's executives . And she promised 300 more jobs from that money !
........ gosh ...... so government's propping up uncompetitve industries doesn't work , huh ?
All is well , she paid about the same amount for a photo-op with the Wolverine Man , Hugh Jackman ..... a movie will create jobs , won't it ?
Good thing that pollies have so much money to lavish on their pet projects ....... I wonder who're the generous benefactors that provide all the loot .......
,,,,,,, " have you driven a Ford , lately ! "
"Whatever it takes to save the Euro" even if it kills us all! LOL
I would say the front wheels of the world global economy are now well and truly off the economic cliff. QE3 will save us! NOT
Hit head against wall for a third time and see if anything changes!
This is just sad, we have NO ONE in power willing to end this charade
negative interest rates popping up every where, so send it to those plonkers in NZ they are still paying interest, US 88 here we come.
"we have NO ONE in power willing to end this charade"
and unfortunately we never will.
We'll unfortunately never get a monorail in NZ its too forward thinking instead we are going to spend billions digging a hole up queeen street, Think of this, instead of double tracking all the auckland metro line they could have put a monorail in and sold all the land underneath, Prime position and public transport!
This might change your mind about a monorail - http://www.youtube.com/watch?v=AEZjzsnPhnw
How can it be non inflationary - it's an increase in the money supply. More consumers (assuming these projects create new jobs) with more money to spend.
Of course that's assuming that the incumbent suppliers - Fletchers, Fulton Hogan etc actually hire more staff to complete these projects. Ever wonder why existing projects take so long to complete?
The only time vision is used is when we plan for the next rugby world cup.
Apart from that our M Ps and other elected officials go into hiding.
If we had vision statehighway 1 from auckland to wellington would be 4 lanes all the way,our railway gauge would be wider and every tinpot little town wouldn't have a shopping mall just to name a few problems with lack of vision.
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