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Here's our summary of key events overnight that affect New Zealand, with news key international data is decidedly 'mixed' and that is being positive about it.
Firstly, the US Labor Department has revised down the non-farm payrolls jobs created in the US economy in 2018 and early 2019 by half a million. The jobs growth in the period was unremarkable compared with the previous period, according to the updated data and undermining the 'great economy' story.
The US August PMI showed factories contracting for the first time in ten years, led by yet another fall in new orders. Their services sector also slowed sharply, and although still expanding that is only marginal now, down from the moderate growth in July.
This data was backed up by the regional Kansas City Fed activity index where the decline deepened.
But at Jackson Hole, a few regional Fed leaders are coming out against more FOMC rate cuts, directly pushing back at aggressive US Administration haranguing. Powell will give his views tonight.
China’s currency has weakened to its lowest level against the US dollar since March 2008, falling for six consecutive days, as uncertainty over trade tensions with the US persists. In fact, it seems that Beijing is intervening to prevent it falling much faster.
In Japan, the latest PMIs show a decided upturn in August, with factories contracting only marginally now, but a strong rebound in their services sector.
In Indonesia, in a surprise move their central bank cut its benchmark seven-day reverse repo rate by -25 bps to 5.5%, the second rate cut in two months - after slashing it for the first time in nearly two years in July.
In Europe, these same PMI readings show little change with contracting factories and expanding services. Overall there is a small expansion but they are bouncing around at a six year low.
EU consumer confidence remains negative, but stable in August.
The ECB is clearly worried about this overall funk. The minutes of their last meeting reveal they are looking at rate cuts and asset purchases in an effort to arrest their economic slowdown.
In Australia, their August PMIs are raising eyebrows. Their factory one is broadly stable (at 51.3) even if it is recording only a very slow expansion. But their services PMI has made a sudden turn down, and is in fact contracting (at 49.2 and down from 52.3 in July). Australia may be the only economy where the factory PMI is more positive than their service sector PMI.
And staying in Australia, regulator ASIC is proposing to ban the issue, sale and distribution of binary options and heavily restrict the sale of contracts for difference (CFDs) to retail clients. It calls them "highly speculative products" and have characteristics "akin to gambling" (see page 7). Last year these products lost "investors" about AU$0.5 bln. (See page 20).
And the New South Wales state migration department “has noticed a significant increase in applications” from Hong Kong in recent months, it said in a letter to agents this week.
The UST 10yr yield is up +1 bps at 1.61%. Their 2-10 curve is now completely flat at +0 bps and their negative 1-5 curve is wider at -30 bps. Their 3m-10yr curve is wider, out at a negative -44 bps. The Aussie Govt 10yr is also up +2 bps at 0.95%. The China Govt 10yr is up +2 bps as well at 3.08%, while the NZ Govt 10 yr is up +3 bps to 1.12%.
Gold is softer, down -US$4 and now at US$1,500/oz.
US oil prices are little-changed today, still just on US$55.50/bbl. The Brent benchmark is unchanged at US$60.
The Kiwi dollar is considerably weaker against the US dollar and now just below 63.7 USc and a new 43 month low. That drops the devaluation since the beginning of July down to more than -5%. On the cross rates we are lower at 94.3 AUc. Against the euro we are also down at 57.5 euro cents. The TWI-5 has now fallen to just on 69 and a ten month low.
Bitcoin is now at US$10,154 and that is marginally higher than this time yesterday. But in-between it did drop all the way down to US$9,762 before recovering. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».