FAO sees ag prices lower, dairy up; EU jobless fall, ECB pressures Italian banks; APRA pressures big 4, China pressures publishers; UST 10yr yield at 1.46%; oil flat, gold up; NZ$1 = 72.3 US¢, TWI-5 = 75.8

Here's my summary of the key events overnight that affect New Zealand, with news from around the world.

Firstly, the FAO has said that the period of high agricultural prices is "likely over" as the world's demographics change. This is a big call. But it also said there will be exceptions, including for milk powder which it expects to outperform. Interestingly, it sees few trade prospects for "fresh dairy products".

In Europe, the latest data for unemployment shows that jobless rates continue to trend down in May. In fact, they are now near a five year low.

In Italy, their banking crisis took another turn overnight with the ECB putting the screws on their third largest bank to raise more capital. Italian banks have about a third of the euro-zone's bad bank debt, and Monte dei Paschi di Siena has about 13% of that Italian exposure. There is some sort of contagion building for Italian banks.

In Australia, their banking regulator APRA has noted that while bank capital there has been rising following their sharp prod in 2014, the big four pillar banks have to go further and raise a shed load more capital to strengthen their capital base. These four banks now rank in the top quartile internationally for capital backup, but international rules are raising everyone else's game in this area. So to remain in the top quartile, even more capital will need to be raised and soon. This affects New Zealand because one place to get that capital can be by raiding their New Zealand subsidiaries. The RBNZ needs to be on its game to prevent these local institutions being hollowed out in any way by downstream pressure from the Aussie regulator.

The RBA does its monthly review of its benchmark interest rate again later today. Before the election, most economists were of the view that their 1.75% rate would stay on hold. That still applies, but the new economic uncertainty driven by their stalemate election is surely on the mind of Governor Stevens and today's statement could give some signals on how they are assessing these risks.

In China, President Xi's grip is getting tighter. China’s powerful internet censorship body has further tightened its grip on online news reports by warning all news or social network websites against publishing news "without proper verification".

Although New York markets are closed for their July 4 holiday, UST 10yr yields are being quoted marginally higher at 1.46%.

The US benchmark oil price is mixed but little changed, now just under US$49/barrel and the Brent benchmark is just over US$50/barrel.

The gold price is up a little further to US$1,352/oz.

The NZ dollar starts today higher as well, at 72.3 US¢, at 95.9 AU¢, and at 64.8 euro cents. The TWI-5 index is at 75.8. and now its highest point in a year. Against the Aussie we are now at a 14 month high.

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

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