David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand.
The Chinese currency continues to be allowed to strengthen against the US dollar, and is now under 6.6 to the dollar for the first time. That represents an appreciation of their currency of 3% in the past four months.
Part of this is to blunt US criticism ahead of Premier Hu’s visit, part is an unavoidable export of Chinese inflation. All of it recognizing the weakness of the US dollar. But is it enough? By comparison, the NZ dollar has risen 8% against the US dollar in the same period.
Across the Tasman, their unemployment level fell to 5% ahead of the QLD and NSW floods, but job growth was surprisingly poor.
There will be a huge demand for labour for their flood cleanup and that will exert pressure in New Zealand. Adding to the local pressure is that TradeMe is reporting a big surge in job ads here.
And we have our own disaster that is requiring people for recovery work. All that will add to rising incomes in 2011 which will help domestic demand.
Moody's has been assessing its AAA rated sovereigns and has pointed the finger at France, Germany, the UK and the US saying they must control government spending.
Australia, Singapore and NZ were also included in this review, and they generally like what they see of how NZ is handling this period. They are making no downgrade threats at all.
And in Europe, the ECB is threatening to raise interest rates there, focusing on countering the inflationary effects of what they have called irresponsible fiscal policies. This will cause a big fight with the politicians and their voters who seem very reluctant to face up to what has to be done. Strikes and reaction are the order of the day in Europe’s flashpoints.