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- 90 seconds at 9 am: American QE 66
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90 seconds at 9 am: G7 currency wars confusion; Dow above 14,000; Mixed signals from Barclays; Aussie mortgage market stalls; NZ$1 = US$0.843, TWI = 76.4
Here's my summary of the key news overnight in 90 seconds at 9 am, including confusing news from the G7 summit. Firstly they issued a statement saying they are happy to let the market decide currency values which was interpreted as Japan-friendly.
This saw quite big moves in currencies overnight, the upshot for us being that the NZ dollar has risen to near its highest post-float level ever. The TWI now sits at 76.4 and exceeding levels earlier in the month. We rose overnight against all currencies except the yen.
Equity markets are in a bouyant mood ahead of the US President's State of the Union speech. In mid-day trade the Dow has pushed up over the 14,000 level again and seem set to go higher. Oil was up earlier in the session, but gold has fallen below US$1,650/oz.
In Britain, Barclays has announced 3,700 job cuts following a loss, and says it is embarking on a new 'overhaul'. But at the same time it has paid bonuses averaging about NZ$100,000 to its investment bankers.
In Australia, there are building expectations that banks there may cut mortgage rates even if the RBA leaves their official rates on hold.
The Aussie mortgage market is weakening quite quickly, exposing the home loan market to a zero-sum game. There has been a steep plunge in the first home buyer market.
But wholesale money costs have shifted there to the point where securitising residential mortgages could be back in favour, a move that would help ease the pain of a low growth market, and enable mortgage offer rates to fall.
In our market, no other bank has responded yet to the aggressive Westpac mortgage pricing, but we will have that news as soon as it is announced.
The kiwi dollar starts the day at 84.3 USc, 81.7 AUc, and the TWI is at 76.4.