Fed officials divided but say rate hike possible as early as Sep; China points finger at Australia for being protectionist; UK job market solid pre-Brexit; UST 10yr yield at 1.58%; oil up, gold down; NZ$1 = 72.4 US¢, TWI-5 = 75.3

Here's my summary of the key events overnight that affect New Zealand, with news Federal Reserve officials believe an interest rate rise is possible as early as next month. Yet they aren’t committing to anything until they can reach a stronger consensus on the shape of the US economy.

The just-released minutes from the central bank’s July policy meeting show officials sought to keep their options open, as they tried to reconcile their differences around the outlook for growth, hiring and inflation. Some of their worries around the Brexit appeared to be appeased by financial markets recovering promptly to the vote.

China is continuing to assert its position in the protectionist battle that’s sweeping the globe. It says Australia’s decision to block the sale of its largest energy grid, Ausgrid, to Chinese bidders is “protectionist and seriously impacts the willingness of Chinese companies to invest in Australia”.

Canberra earlier this year knocked back an offer by a China-led consortium to buy the country’s largest agricultural land owner. China’s been biting back to similar decisions being made by the US and EU, by issuing these warnings and implementing protectionist policies itself. See this Interest.co.nz interview and this column for more on the topic.     

Fears a Brexit would trigger widespread job losses weren’t realised last month, with the number of people in the UK claiming jobseeker’s allowance falling. The unemployment rate in the three months to the end of June also remained unchanged, while average weekly earnings rose. We shouldn’t hold our breath for this resilience to continue as the reality of the Brexit really hits.

US mortgage applications slipped to a six-month low last week, despite interest rates falling. The Mortgage Bankers Association’s mortgage activity index fell 4% in the week, yet remained 10% higher than this time last year. The US housing market still looks buoyant, with Government data released yesterday showing housing starts hit a five month high last month.

The UST 10yr yield has remained unchanged since this time yesterday at 1.58%.

The US benchmark oil price is rising. It’s at US$47/barrel while the Brent benchmark at US$50/barrel.

The gold price has dropped slightly to US$1,347/oz.

The New Zealand dollar jumped following the release of the FOMC minutes, but has settled to 72.4 US¢. The Kiwi has strengthened slightly overnight to 94.7 AU¢, but has dropped to 64.2 euro cents. The TWI-5 index has fallen to 75.3.

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 today is by following our Economic Calendar here ».