Here's my summary of the key news overnight in 90 seconds at 9 am, including news of another large drop in dairy prices early this morning.
The latest globaldairytrade auction recorded an overall fall of -8.4% in US dollar terms with the WMP price falling -11.5% and cheddar -10.2%. Butter fell -9.6%, while SMP took the least hit, down -6.5%. These are falls from just three weeks ago. Compared with the start of 2014, they represent a fall of almost -40%.
The NZD fell at the same time, although not quite as sharply. That has limited the drop in local currency. We are down -5.2% in NZD. But that is still a major fall and will immediately throw the recent Fonterra dairy payout into question. A figure below $6/kgMS is now entirely possible, challenging many dairy farm budgets.
In the rest of the world the news is not so grim. In the US, the closely watched ISM non-factory index came in higher than expected with service industries such as builders and retailers growing in July at the fastest pace since December 2005. Factory orders grew in June to their highest level since 1992 when the data was first collected.
On the other hand, China’s service industries stagnated in July as the HSBC index fell to a record low, suggesting the government’s stimulus measures are failing to gain traction outside of manufacturing.
In Australia, the RBA kept its cash rate target unchanged at 2.5% as expected late yesterday and surprised no-one with its commentary.
Equity markets are down sharply in New York today in late afternoon trade as some recent earnings reports disappointed; UST 10yr yields rose to 2.51%.
The oil price fell again today on the US benchmark and is now under US$98/barrel. On the Brent benchmark it is now under US$105/barrel. Gold however rose marginally and is now at US$1,291/oz.
We start today with the NZ dollar down following the dairy auction. We are now at just under 84.7 USc, just over 91.0 AUc. The TWI is at 79.4. And don't forget more important local news today. The unemployment data for June will be out at 10:45am this morning.
If you want to catch up with all the changes on Friday we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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