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90 seconds at 9 am: Dow edges down ahead of Fed decision; Eurostoxx fall as unemployment rises to 11.2%; NZ$ solid ahead of Fonterra auction
Here's the key news overnight in 90 seconds at 9 am, including news the Dow fell 0.5% as investors settled in to wait for tomorrow morning's announcement from the US Federal Reserve about how and whether it will announce new measures to stimulate the world's largest economy.
Bloomberg reported most economists expect the US Federal Reserve will wait until its September 13 meeting before announcing a fresh round of money printing or quantitative easing to buy US$600 billion more of mortgage bonds and government bonds.
It could also extend its forecast of near-zero % interest rates beyond its current horizon of late 2014 or cut its interest rate for bank excess reserves at the Federal Reserve.
Many expect the Federal Reserve will wait for more information from the key non farm payrolls report for July due out on Friday night New Zealand time.
Further reinforcing the slowdown in the US economy, US consumer spending was stagnant in June as consumers worried about their jobs saved any extra income. See more here at Bloomberg.
Meanwhile, European stocks fell around 0.6% after Swiss bank UBS and global oil giant BP reported profits that missed expectations. Also, Euro-zone unemployment rose to 11.2% in June, with unemployment at 24.8% in Spain, unemployment in Portugal at 15.4%, Ireland at 14.8% and France at 10.1%. See more here at Bloomberg.
European markets are on tenterhooks for the European Central Bank's announcement due on Thursday night New Zealand time. Many hope for some news to calm Southern European bond markets and reduce the yields Italy and Spain are paying for their debt. Markets eased some of their enthusiasm after German officials poured cold water on the idea of using a rescue fund to buy Italian and Spanish bonds.
Meanwhile in Asia, South Korean factory output unexpectedly fell in the three months to June, reinforcing concerns that the Asian growth engine in China is sputtering. Korea supplies many of the components assembled in Chinese factories. See more here at Bloomberg.
China again reiterated that growth was its key priority in a statement via official news agency Xinhua last night, although it was vague about what action Chinese authorities would take.
Closer to home, traders are watching for the results of Fonterra's next fortnightly milk powder auction due tomorrow morning. A severe drought in the United States has yet to boost dairy prices. See more here in BNZ's currencies report on our site.
The New Zealand dollar was solid just under 81 USc in overnight trade.