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90 seconds at 9 am: NZ$1 = US$0.84 TWI - 75.5, world's biggest currency gainer; NZ borrowing jumps; China's investment bubble; US income gains; Congress ignoring budget crunch
Here's my summary of the key news overnight in 90 seconds at 9 am, including news that our exchange rate firmed markedly overnight starting the new month at 84 USc, with the TWI at 75.5. It is the biggest mover in the world's currency markets in northern hemisphere trading. The rise began following Governor Wheeler's OCR review yesterday.
January started the year with the currency at a high level, and the TWI reached its all time post-float high on January 11 at 75.7. We are up across the board and close to an all-time high against the British pound as well.
Late yesterday afternoon the Reserve Bank released credit data for December and that showed a sharp resurgence in lending for housing and farms. It also showed a significant rush back into fixed rate mortgages. More details here ».
In China, S&P says China is over-investing and is vulnerable to an "investment-led collapse". More that 40% of economic spending there is on infrastructure, factories and housing. Australia and Indonesia are also vulnerable, says S&P.
In the US, initial jobless claims increased by 38,000 to a seasonally adjusted 368,000 in the week ended January 26, but the overall level still signaled a slowly growing labour market. In Decemebr, personal income rose the most in eight years according to a release this morning. But the subsequent payroll tax increases which started in January are definitely putting a damper on US confidence and spending in the new year.
Also, there is almost nothing going on to avert the drastic US budget cuts that are looming - they are not even talking about them in Congress and it seems they are sleepwalking toward a major crunch.
In Britain, banks there face major compensation claims that could total billions of pounds after the regulator found they had widely mis-sold complex interest-rate hedging products to small businesses.
Stocks are down in mid-day trade, and commodities are weaker too, with both oil and gold falling from yesterday.
The New Zealand dollar starts today quite a bit higher at 84.0 USc, 80.5 AUc, with the TWI up to 75.5.