GDT prices suffer only a tiny fall; US CPI 2%; US house building expands; UST 10yr 2.40%; oil and gold fall; large grain surpluses forecast; NZ$1 = US$0.843, TWI = 79.2

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of the latest dairy auction.

There has probably been a sigh of relief in many quarters at the results of the overnight dairy auction results. Overall, prices fell just -0.6% in US dollars, -0.2% in New Zealand dollars.

Most of the fall was caused by a -12% drop in skim milk powder prices and cheese fell -7.9%, but other key elements showed gains over the last auction on August 5. For example, wholemilk powder prices rose +3.4% and butter was up +4.9%. This gives the suggestion that the price falls may be coming to an end. It was a little surprising that the Russian sanctions seemed to have little impact on bidders. The average price over all commodities was just on US$3,000/tonne which is the lowest in two years. 

In the US, consumer prices data came in almost as the market was expecting, showing American cost of living rose just under a +2.0% rise in the year to July. 

US home construction rebounded in July on a strengthening economy. A 16% jump took housing starts to a 1.09 million annualised rate, the strongest since November, reversing a two-month slide. Building permits were up in a similar manner, plus there were upward revisions to the June data. This data paints a positive picture of growing confidence.

Remember when US and European banks had to raise capital to bolster their institutions? Well, Chinese banks are now about to do the same. One of China's big four banks has met with European investors as part of its early efforts to sell billions in dollars of shares.

UST 10yr benchmark bond yields rose again today and are now at 2.40%.

The US oil price fell yet again and is now under US$95/barrel. Brent is down as well and still under US$102/barrel. Gold also fell - about another US$4/oz - and is now at US$1,294/oz. Our dairy prices have dodged a bullet today as commodity weakness spreads, even in soft commodities like wheat, corn and soyabeans. Huge American crops are now expected. And now better weather in China has estimates of their grain harvest being boosted - even as they struggle with large surpluses. The world is awash in food.

We start today with our currency marginally lower with the dairy auction having little effect on it. We are at 84.3 USc, 90.6 AUc, and the TWI is at 79.2. 

If you want to catch up with all the changes yesterday we have an update here.

The easiest place to stay up with today's event risk is by following our Economic Calendar here »

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At 1033ET, Bloomberg headlines flashed: "WHOLE MILK POWDER PRICES FALL 11.5% IN GDT AUCTION" which caused an instant collapse in Kiwi (NZDUSD) as headline-reading algos reacted. However, as "humans" knew and @FXMacro reminded Bloomberg, that was last month's drop...

"The pace of their OCR rises was probably not merited," said Bancorp's Cavanaugh. "They are going to be slower to neutral than expected."
One suspects that "neutral" is more likely to be discovered to be 2.5/3.0% than the 5% previously cited.

Coming to an oil field near you. US fracking tech expands beyond border.

"Argentina’s joint venture with Chevron Corp. (CVX) helped more than triple production in the Neuquen basin shale formation known as Vaca Muerta in the first quarter from a year earlier, according to data compiled by Bloomberg Intelligence. Vaca Muerta is the world’s second-largest shale gas deposit and fourth-largest shale oil field."