Asian rate cuts; weaker US retail sales; most US banks pass stress tests; China property sales dive; AU jobless rate falls; NZD jumps; NZ$1 = 73.8 USc, TWI = 79.1

Here's my summary of the key issues from overnight that affect New Zealand, with news of a new round of rate cuts by Asian central banks.

South Korea and Thailand cut official rates overnight adding to recent reductions by China, India, Indonesia, Malaysia, the Philippines, Singapore, Taiwan and Vietnam. All these countries operate pegged exchange rates. Central bankers won’t utter the term, but the rising wave of surprise rate cuts has the strong sense of a currency war. In many of these countries rates were already very low and it is hard to see how a few basis points lower can actually solve any growth problems.

Across the Pacific, US retail sales for February have come in weaker than expected. They were up +1.7% year-on-year but fell on a seasonally adjusted basis from the previous month. Lower petrol prices had an impact, but it was the unusual fall in 'general merchandise' that had analysts' attention.

Rough cold weather in large parts of the country got some of the blame. At the same time, inventories came in flat in January but the stocks-to-sales ratio is climbing.

All the large US banks passed the Fed's annual regulatory stress tests. But Bank of America passed only provisionally and could still fail later this year if it does not fix deficiencies that the Fed identified. Goldman Sachs, JPMorgan Chase and Morgan Stanley, which dominate Wall Street, each had to alter their planned payouts to investors to achieve passing grades. The American units of Deutsche Bank, and Santander of Spain failed the tests outright.

In China their government may be forced to relax property regulations and support the country’s weak real estate sector after sales dived more than 16% in January and February, and adding to concerns of a sharper-than-expected downturn.

In Australia, their unemployment rate fell marginally to 6.3% but that was at the cost of a lower participation rate. 15,000 more people found jobs in February than January.

The UST 10yr yields are falling again today and are now at 2.08%. New Zealand wholesale were also falling yesterday before the optimistic RBNZ MPS announcement, but then reversed direction and ended unchanged.

The crude oil price was unchanged overnight at US$48/barrel while the Brent crude price is holding at US$57/barrel. 

The gold price is also unchanged at US$1,149/oz.

The New Zealand dollar starts today at its highest level in over a week. It is now at 73.8 US¢ which is up more than 1½ USc, it is at 96 AU¢, and the TWI is up to 79.1.

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

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