Japan in worse shape; China trade reveals weaknesses; Europe's banks warned; Aussies ready to levy a 'Google tax'; oil slumps again; NZ$1 = 76.6 USc, TWI = 77.5

Japan in worse shape; China trade reveals weaknesses; Europe's banks warned; Aussies ready to levy a 'Google tax'; oil slumps again; NZ$1 = 76.6 USc, TWI = 77.5

Here's my summary of the key issues that affect New Zealand overnight with news of a further slump in oil prices.

But first, Japan's Q3 economy shrank more than first estimated in data out overnight. It fell -1.9% rather than the -1.6% first reported.

China's trade balance jumped sharply in November, but in an odd way. Exports grew just +4.7%, far less than the +8% expected and the +12% in October. However imports actually fell; they were down -6.7% rather than the +4% rise that was expected and +4.6% growth in October. Lower oil prices are benefiting China in a major way. At the same time this data suggests China is slowing faster than expected. There are growing calls from within China for "more stimulus". One reaction to all this is that the Chinese currency fell sharply, even against the NZD, and it is now near its lowest level since 2010.

Europe's banks face a tough year in 2015 as fresh and as-yet unfinished regulatory hurdles compound problems created by a stalling economic recovery, credit rating agencies Moody's and Standard & Poor's warned overnight.

In Australia, they appear ready to impose a 'Google tax', following the British moves recently.

In New York, UST 10yr bond yields fell marginally today and are now at 2.29%. 

The oil price has fallen sharply again in US dollars. It is now merely US$63/barrel and the Brent price is down to US$66/barrel. US$50 oil now looks entirely possible. Oversupply problems look like they will extend well into 2015. Weaker than expected economic data out of both China and Japan isn't 'helping' either. Also another problem is that hedge funds may be selling out having over-bet on the sector. First they lost on gold, now they are losing on oil.

Today, the gold price is hovering at the US$1,194/oz level.

The kiwi dollar has fallen further against the US dollar overnight and is now at its lowest level since June 2012. We start today at 76.6 USc, 92.4 AUc, and the TWI is at 77.5.

If you want to catch up with all the changes yesterday 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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2 Comments

I'll bet a shed-full of money that fuel prices at the pump will drop , BUT  not in tandem with the fall in crude .
The fuel companies will take maximum advantage , arguing that the fuel being retailed now was bought when the prices were sky -high
Unlike the the reverse scenario , when Brent  crude prices go up,  the petrol and diesel prices go up overnight .
How will the China currency story affect dairy and food exporters ?
The sudden oversupply of milk powder from Denmark , Ireland,  Poland , Holland and France which previuosly went to Russia is likely to find its way to China , which is our play-ground.

heres a thought for Xmas
"I like to call it selling them shit they don't need at prices they can't resist," says Mr Leibovich, founder of Catch Group, of his bargain-based e-commerce offers to online shoppers.
Receiving around 250,000 visitors daily, Catchoftheday.com.au is one of Australia's most visited shopping sites, and the group is one of Australia Post's largest customer for parcel delivery. 
http://www.smh.com.au/it-pro/business-it/robots-are-processing-your-catch-of-the-day-orders-this-christmas-20141208-1200js.html
be well