Australia to up the ante on money laundering regulation; ECB worried about a euro 'overshoot'; US unemployment benefit applications at a low; UST 10yr yield at 2.21%; oil and gold up; NZ$1 = 72.9 US¢, TWI-5 = 75.6

Here's my summary of the key events overnight that affect New Zealand, with breaking news 13 people have been killed as a van has ploughed through a crowd in Barcelona. The Islamic State has reportedly claimed responsibility for the attack.  

Australia will start regulating digital currencies like bitcoin for the first time. Its Justice Minister has announced plans to reform the country’s anti-money laundering laws to bring digital currency providers under the remit of the Australian Transactions and Reporting Analysis Centre (AUSTRAC). It also plans to strengthen AUSTRAC’s money laundering investigation and enforcement powers, increase border control and deregulate low-risk industry sectors. The announcement has been made just days after a fresh money laundering scandal has been uncovered at the Commonwealth Bank of Australia.

The euro has sunk, following minutes from the European Central Bank’s (ECB) latest meeting showing policymakers are concerned about an overshoot in the currency. A strong euro, making European exports less competitive, could threaten policymakers’ efforts to boost inflation. The ECB says favourable financing conditions shouldn’t be taken for granted.

The number of Americans who requested unemployment benefits fell to near a six-month low last week. The data points to a further tightening in the labour market that could encourage the Federal Reserve to start unwinding its massive bond portfolio.

Retail sales growth in Britain slowed as expected in July, after a strong second quarter. This points to a continuing trend of subdued growth, as consumers feel the sting of higher inflation.

In New York, the UST 10yr yield has slumped to 2.21%. Commenting on this low yield, the Dallas Fed President Robert Kaplan says the central bank should be "patient and judicious" as it considers interest rate hikes. He says there’s “no doubt that as the [yield] curve gets flatter and inverted, that is a sign of economic trouble".

The US benchmark oil price is up a notch to US$47 a barrel, while the Brent benchmark is at US$51. The move comes as a new report highlights declining stockpiles in a part of the US.

The gold price is a few dollars higher at US$1,287/oz.

Turning to the dollar, the Donald Trump effect appears to be keeping the US dollar lower than you might otherwise expect. The New Zealand dollar is at 72.9 USc, 92.4 AU¢, and 62.1 euro cents. The TWI-5 index is down a little to 75.6.

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

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

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9 Comments

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Tony Alexander in his weekly column yesterday;
"Auckland is interesting in that there is now an over-supply of properties which can be intensified. The finance is not there to allow construction, and neither are the builders. So lots of investors are now sitting on potentially highly geared up properties they cannot get anyone to buy and develop."

Sounds to me like a FHB would be best to let this play out.

No reference to the fact he predicted prices would keep rising until 2019.

No reference to the fact he said house prices couldn't fall.

No reference to the "permenantly higher level" of prices he's always talking about.

After years of telling the non-property owner how stupid they are for not buying, he's now their best friend.

Any half decent real estate industry spruiker knows that the ponzi only keeps going if first home buyers keep loading up on debt at the bottom of the pyramid. Tony knows this. This isn't a witch hunt, but it's a bit frustrating when someone gets it wrong (and looking more wrong by the day) and then subtly shifts the narrative over a period of months until one day they will be saying "this is playing out exactly as I said it would" - rubbish! If you want to remind everyone in every weekly column how right you have been for years now, you've got to own it when you're wrong.

There is no good reason to listen to any of the bank's so called "experts" unless you are interested in what particular angle they are taking to drive their bank's profits higher.

Snake oil salesmen them all!

An economists forecast tells you more about them personally than it does about the outlook of the market....

Tony "Meth House King" Alexander has said a lot of things that are wrong. Best to steer clear of his advice, unless you do the opposite of what he says.

In New York, the UST 10yr yield has slumped to 2.21%. Commenting on this low yield, the Dallas Fed President Robert Kaplan says the central bank should be "patient and judicious" as it considers interest rate hikes. He says there’s “no doubt that as the [yield] curve gets flatter and inverted, that is a sign of economic trouble".

Indeed.

It is why UST yields and eurodollar futures prices have moved this year in the “wrong” direction, just as they did three years ago. Policymakers and economists are still seeking the economy that “should be” when by now it is obvious there is no such thing. What’s really out there is one “unexpected” lost decade turning “unexpectedly” into two. That scenario justifies lower rates and higher eurodollar futures prices no matter what the empty suits at the FOMC do about wage pressures that never seem to materialize. Read more

I have a number of Crypo Currencies, some are doing very well.

Interesting. How did you enter the market...and any recommended wallet?

Happy to help, I bought Bitcoin and some ETH off https://localbitcoins.com and used Jaxx as a wallet initially, from there I've branched out to using Coinomi as another wallet (as Jaxx didn't hold all the coins I wanted). I've used Shapeshift (built into the wallets) to change to other coins and left it pretty much at that for now. I honestly knew about Bitcoins when they were cents each but I couldn't work out how (and probably didn't try hard enough) to actually buy any, I wanted to stick in $500.00 that would mean a value of about $10 million NZD now, ah well, you live and you learn. Definitly do your own research on what coins to buy, a lot of coins explode from cents to dollars over night and I am yet to spend time to research them as it means setting up a wallet and passing ID checks for exchanges in the USA/Europe (Bittrex etc). Lastly I use Blockfolio to keep an eye on coin values. (all the above are for android OS and some work on windows)

So long as people are wary of wallets (where there has been fraud in certain cases), and don't hold large balances of cash or cryptocoins on exchanges that should minimise risk. I've seen a lot of money disappear through various events including the collapse of MTGOX.