Here's my summary of the key news over the weekend to keep you up-to-date over these holidays.
First to note is that our exchange rate took a sharp turn upwards at the end of last week and starts today at an eight month high on the TWI. We rose across the board.
Gold rose again as small investors bid up the price of coins and bars, but international crude oil prices fell - both the US and Brent benchmarks. Demand in China dropped in its latest survey, and US inventories are high. Keep an eye on our petrol prices; they should fall.
The UST 10 yr benchmark is touching above 3% again, and a Bloomberg survey of market participants over the weekend showed that they expect it to reach 3.38% by the end of 2014.
And another commodity is in the news too - US beef prices. They have shot up to their highest level ever, as the cumulative effect of a long Midwest dry spell has ranchers holding on to animals to build back their herds. Low grain prices are encouraging the re-stocking. These high prices underpin the good prices Kiwi beef farmers are currently getting.
And staying with commodities, China's top foreign exchange regulator said over the weekend that they would consider a transaction tax to restrain hot money speculation following a year of strong currency inflows.
China would be following the EU who have said they will institute a Tobin tax sometime this year.
In Australia, their competition watchdog, the ACCC, has called for a major sell-off of state trading enterprises like their energy companies, Australia Post, and their medical insurer. The claim is that this would be one of the most effective ways to improve their sagging productivity.
In China, their previously reported slowing in manufacturing PMI was followed up over the weekend with a slowing of growth in their services PMI. These index changes were behind the fall in the price of copper.
The NZ dollar starts today at 82.7 USc, 92.6 AUc, and the TWI is at 78.4
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
No chart with that title exists.
4 Comments
Yi Gang, head of the State Administration of Foreign Exchange (SAFE), wrote in an article for the Communist Party theoretical journal Qiushi that China should ‘study in depth’ the so-called ‘Tobin Tax’ on financial transactions.
Chen Bo, a professor at the Shanghai University of Finance and Economics, told the China Daily that a ‘Tobin Tax’ would work as a market-oriented way to cut down foreign exchange speculation in lieu of China’s present system in which the PBoC gives approval on a case-to-case basis.
“The tax will make certain otherwise profitable transactions unprofitable and thus reduce speculation,” Chen said, according to the paper.
Chen predicted that the tax was likely to be introduced along with a quota system to manage China’s foreign exchange market as temporary measures ahead of China making its capital account fully convertible, adding that the tax would probably be imposed nationwide as opposed to selectively in certain areas.
To the E.U., as long as Britian is vehemently against reducing speculation Merkel is pushing the proverbial uphill.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.