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Here's our summary of key events overnight that affect New Zealand, with news world trade growth is on the skids.
But first up today, the Kiwi dollar has now slipped to its lowest level in ten years. And this has allowed the overnight dairy auction to post a reasonable gain, up +2% in NZ dollar terms. In US dollar terms it was flat, up just +0.2% with SMP gains preventing an overall slip. But that low exchange rate does mean that in New Zealand dollars, WMP prices are now over NZ$5000 for the first time since the end of 2016. Dairy industry prices are being held up by a sinking Kiwi dollar.
In the US, there has been an unwelcome surprise from their influential ISM factory PMI which was expected by analysts to rise out of contraction but instead slipped back further in, and to a ten year low. They reported a decrease in business confidence with global trade concerns the main reason new orders are falling. And low US car sales aren't helping. This report actually caused fright in equity markets and the S&P500 is down -1.2% in mid-afternoon trade.
North of the border, Canadian GDP also came in weaker than expected, up +1.3% in July which was a slip from +1.5% in June. Following four months of growth, the Canadian economy now seems to have stalled.
The World Trade Organisation isn't optimistic either, Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020. World merchandise trade volumes are now expected to rise by only +1.2% in 2019, substantially slower than the +2.6% growth forecast in April.
In Japan, their latest PMI doesn't make for happy reading in September. Their manufacturing sector is under pressure as firms cut production amid sustained weakness in demand. A sharper drop in output was accompanied by quicker declines in new orders and purchasing activity, while inventories were also reduced.
Japan vehicle sales are a bright spot, juiced up +12% in September ahead of their rise in GST that came into effect yesterday.
In Hong Kong, protesters flooded the streets again to push-back against China's 'celebration' and police responded with live fire. This battle between the people and Beijing's imposed government has moved into a new, riskier stage.
In Australia, their central bank delivered a -25 bps rate cut taking their policy rate down to 0.75%. Most expect it will cut further in the face of expected softer employment growth. QE is closer too to prevent them from slipping into recession.
Staying in Australia, there were two competing PMI reports out yesterday for September. The local one saw factory conditions improving, the one that ties into the international set saw the reverse. Both saw their factory expanding, just at different trajectories.
The number of building consents in Australia are still worryingly declining. They were down -23% in August from a year ago, and for the full year to August, they are down -22% compared to the same period a year ago. These are massive declines, exceeding -50,000 dwellings in a year.
The UST 10yr yield is down -4 bps on the ISM report to 1.64%. Their 2-10 curve positive at +9 bps. Their negative 1-5 curve is wider at -24 bps. But heir 3m-10yr curve is much narrower at -16 bps. The Aussie Govt 10yr is sharply lower at 0.93%, an overnight fall of -9 bps. The China Govt 10yr is unchanged at 3.16%. The NZ Govt 10 yr is at 1.14%, a +2 bps rise from yesterday.
Gold has recovered +US$13 after yesterday's sharp fall or about a half of that, now up to US$1,482/oz.
US oil prices are lower again today, down more than -US$1.50 and now just under US$53.50/bbl. The Brent benchmark is just over US$58.50. Sharply lower demand is behind today's drop.
The Kiwi dollar is weaker today, now at 62.4 USc and as we mentioned earlier that is a new ten year low. On the cross rates we are back up to 93.2 AUc after the Aussie fell on the RBA rate cut. Against the euro we are at 57.1 euro cents. That puts the TWI-5 back down to just on 68.1.
Bitcoin is now at US$8,456 and +2.3% higher than this time yesterday. 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 ».