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US jobs picture brightens; factories stronger except in France; UST 10yr 2.28%; gold lower; WMP prices up; NZ$1 = US$0.782, TWI = 76.2

US jobs picture brightens; factories stronger except in France; UST 10yr 2.28%; gold lower; WMP prices up; NZ$1 = US$0.782, TWI = 76.2

Here's my summary of the key news overnight in 90 seconds at 9 am, including news we go into the long weekend watching an improving global economy.

New claims for American unemployment benefits held below 300,000 for a sixth straight week last week - in fact unadjusted data has them at just 255,000 - suggesting their labour market was shrugging off concerns about a slowing global economy.

Although it fell in October, the latest flash PMI for the US remains strongly positive. In fact, stocks rose in New York in late trade, led by the industrials and strong earnings, despite eurozone woes. Companies like Caterpillar are particularly optimistic.

The German economy is actually holding its own, but France is definitely going backwards.

Meanwhile, the Chinese manufacturing PMI rose in October, adding to positive signs that they may be weathering their housing market downturn in reasonable shape

In New York, UST 10yr yields are rising today and are now up to 2.28%.

Yesterday's low New Zealand CPI shows the market is expecting an extended rate hike pause by the RBNZ which means the yield advantage New Zealand has will not grow. Therefore the exchange rate has been marked down today and swap rates have also taken a tumble across the curve. Ignored by markets is the fact that a sharply lower dollar will raise tradeable inflation, undermine any chance of fuel cost reductions, and pump up the CPI in coming quarters. It is likely interest rate markets here will bid back up swap rates today as they come to their senses.

The oil price is also slightly higher, now just under US$82/barrel with the Brent price now under US$87/barrel. A new commercial oil field has been discovered in the North Sea.

The gold price however took a big tumble today and is now down to US$1,229/oz and giving up all its gains over the past week.

And speaking of commodities, the latest USDA dairy price monitoring for 'Oceania' shows wholemilk powder prices rising again. In US dollars they were up 3% in two weeks, in New Zealand dollars they are up a bit more. More interesting is that they are reporting prices that are almost 9% above the Fonterra auction price. These movements are similar for butter, but not as strong for other products.

We start today with our currency a lot lower. The NZD is at 78.2 USc which is more than a 1c drop since this time yesterday, at 89.3 AUc which is also a 1c drop, and the TWI is at 76.2.

And finally, here's a piece of irony for you. The giant American tobacco company Reynolds has banned smoking in its offices; its not safe for non-smokers they say. Go figure.

If you want to catch up with all the changes on Friday 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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1 Comments

Where was the 9% upward (linkwise)

here? http://www.ams.usda.gov/mnreports/md_da127.txt

Current production is strong due to the seasonal influx of milk. Available supplies are building.

seems to match http://www.globaldairytrade.info/en/product-results/whole-milk-powder/

inventory comment from yesterday

Whole milk powder inventories [NZ held]as of the end of 2014 were forecast at a record 200,000 tonnes, up 27% year on year, rising more slowly to 220,000 tonnes by the close of next year as Chinese demand recovers.

tia.

 

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