Gareth Vaughan details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, with news the New Zealand dollar has touched another record high of 62.60 euro cents, has risen to 52 British pence, which is nearing its record high of 53.70 and the Trade-Weighted Index (TWI) is at 71.2, its highest level since September last year. See more on the NZ dollar from the BNZ's Mike Jones here.
This came amid continuing concern Europe will fail to resolve its sovereign debt crisis soon, weakening the euro and shares on both sides of the Atlantic and boosting United States Treasuries. Official data also showed the German economy, the euro-zone's biggest, contracted by about 0.25% in the fourth quarter of 2011 from the third quarter.
It also emerged that Euro-zone banks are hoarding much of the European Central Bank's €489 billion December injection into the banking system, and therefore effectively thwarting the ECB's attempts to prevent a credit crunch. Much of the money has ended up on deposit with the Frankfurt-based ECB instead of being lent to companies and individuals. Overnight deposits with the ECB have jumped by about €223 billion to a record €486 billion since the loans were made to 523 lenders.
Governments are urging European banks to keep lending while also telling them to raise nearly €115 billion of core capital by June to combat the sovereign-debt crisis. But instead of raising equity, Bloomberg reports most European banks plan to meet the capital rules by cutting €950 billion from their balance sheets over two years, either by selling assets or not renewing credit lines, leading to concerns they'll cut lending and kill off any economic growth in the euro region.
Meanwhile, amid heightening tensions between Iran and the US, an Iranian nuclear scientist has been blown up in his car by a motorbike hitman with Iran blaming Israeli and US agents while insisting the killing won't halt its nuclear programme. The scientist was killed by a magnetic bomb as he drove down a busy street near Tehran University.
The killing comes at a tense time. Iran has started an underground uranium enrichment plant and sentenced an American to death for spying; The US and European allies have stepped up efforts to cripple Iran's oil exports for its refusal to halt work they claim really involves plans to build nuclear weapons, rather than the power plants Iran claims.
For its part Iran has threatened to choke the West's oil supply through blockading of a key area in the Persian Gulf - the Strait of Hormuz - leading to a US warning its navy is ready to open fire to prevent any blockade.
Despite the latest development, the price of West Texas crude oil was largely unchanged at US$101.7 a barrel. See more here at Reuters.