US jobs data disappoints; NZ dollar almost at mid-rate parity; Greeks print drachmas; China wants housing bank; gold and oil higher; UST 10yr yield 1.9%; NZ$1 = 75.8 US¢, TWI = 80.5

US jobs data disappoints; NZ dollar almost at mid-rate parity; Greeks print drachmas; China wants housing bank; gold and oil higher; UST 10yr yield 1.9%; NZ$1 = 75.8 US¢, TWI = 80.5

Here's my summary of the key issues from over the long holiday weekend that affect New Zealand, with news of a retreating US dollar on risk fears.

First up, there was a very disappointing American non-farm payrolls report out on Saturday morning.

That saw the US dollar fall and the NZ dollar rise. But is was the rise in our currency against the Aussie dollar that drew special attention.

We reached 99.75 AUc just before markets closed in New York on Saturday morning, a whisker shy of technical parity.

As you know, we have already reached parity on the bank Buy rate. Mid-rate parity will get other media making a noise but the plain fact is no trading goes on at the Mid-rate.

The next real event will be parity on bank Sell rates (and before that, parity on Sell rates for the competitive non-bank currency transaction houses). It is all entirely feasible because the RBA may well cut its policy rate in its review at 4:30pm today, and that may push things along faster - if markets don't price in the moves before then.

The other big news is the teetering situation in Greece. The Greek government came out late last night saying all is well and they will make all their loan payments on schedule. But credibility is low. No analyst can see how that can be possible.

In fact, there is a sizeable bank run going on right now and the Greek government is actively preparing to reissue drachmas again. Everyone involved with the Greeks is frustrated, both creditors, and international investors in the country. New Greek ministers are threatening nationalisations everywhere.

And no-one thinks the Russians will ride to Athens rescue.

But markets are basically ignoring the Greek risks to the euro.

In China, an official there has called for a "national housing bank" to prop up their property markets. They must be worried.

And by the way, if you are a saver, be thankful you have a term deposit in New Zealand. 

In New York, the UST 10yr yield slipped on Friday to 1.83% but is back up to 1.90% this morning. 

The US oil price is up to US$52/barrel and Brent crude is at $58 a barrel. The gold price also jumped and is now at US$1,220/oz. Both moves are as a result of a falling US dollar. Meanwhile New Zealand is working on practical steps to release an enormous natural gas resource - "world class in quality and quantity".

The New Zealand dollar will start today higher at 75.8 US¢, still very high against the Aussie at 99.4 AU¢, and the TWI is over 80 again at 80.5.

All the main bank Buy rates opened today at better than parity. There are their offer rates at 8:36 am today:

And here is the bank Sell rates at the same time:

If you want to catch up with all the local changes on Thursday, we have an update here.

The easiest place to stay up with event risk is by following our Economic Calendar here »

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18 Comments

When NZ cuts interest rates will NZD maintain Aussie parity? Australia has at least another 2 cuts to go in the short term so will NZ stay with its high interest rate, high dollar, tight monetary policy? 

The high $NZ isn't putting off those foreigers coming here for the schooling....
An aquaintance owns a Auckland Remmers house. Recent council valuation: $1.6m. Sold for $2.15m to a Korean here on a property buying mission. They saw it, they bought it. No mucking around.

NZ's education system is providing an alternative immigration pathway for more immigrants than those applying directly, as well as funding schools and universities for the 20% running costs that the Govt short-funds.  It's a win-win for the govt - third-world countries now ironically prop up NZs universities financially, while the incoming migrants with their Diploma prop up the housing prices in Auckland to high levels.  
 

They have to find a job in the sphere their degree+ is in inside of 12months I believe.  

Good point. Presumably though in the Korean in Remmers story, the $2million is a downpayment on tax payer funded schooling at Auckland Boys/ Epsom Girls Grammar, and then Auckland Uni. With a slightly expensive house thrown in.
 

Which will we tap into first, Fusion power or methane hydrates.  Both are the fuel of the future.

I disagree...
 
Renewables are the fuel of the future...
 
Stored in new very efficient and cheap batteries...
 
http://news.stanford.edu/news/2015/march/aluminum-ion-battery-033115.html
 
I also think people are going to be far more willing to look at Hydro/Solar/Wind in their back yards if the extreme plight of the planet was explained... 
 
Better compensation for the people affected.
 
And better use of the land (for recreation etc.) around the land used for Hydro etc. Lovely walks/horse riding tracks/mountain bike trails round the new lake etc.
 
The trouble with Pollies is their 4 year horizon... tends to make it pretty bad for the planet.
 
Could even take a cross party appreach for the Conversation/Energy stuff and disconnect it from the Goverments as its so important!
 
Keep it in the ground!
 
Ban non electic car import in 5 years.

The fuel of the future, and they always will be.  BTW lead acid batteries are still the best value for money.  At least where weight and room are not an issue, such as domestic use.  Easily recyclable, whereas the batteries in the link are not even in the same ballpark.  Maybe they will work in EV's, to early to say, what they wont do, is function as energy storage for renewable.

>  lead acid batteries are still the best value for money
Ill take your work on that (makes sense as only recently battery technology has become important enough to invest in it).
 
> whereas the batteries in the link are not even in the same ballpark
They are bleeding edge.. I would not expect then to hit the shelves for a good while yet.
 
> what they wont do, is function as energy storage for renewable
There is significant research in that area.
But with some lateral thinking, these problems are surmounted. In UK water is pumped from the lower resevoir to the upper one when ndemand in low and it flows back when the power is needed...  Thats just a HUGE battery that can provide power at night in low winds... 
 
http://www.brightknowledge.org/knowledge-bank/geography-and-environment/...
 

Pumped storage in the UK
Most pumped storage plants are located in Scotland, except the largest of all,Dinorwig, which is in North Wales. Dinorwig, built in 1984, produces 1,728 MW (megawatts). This is enough electricity to power nearly 7 million desktop computers. Dinorwig has the fastest "response time" of any pumped storage plant in the world - it can provide 1320 MW in 12 seconds.
 
 
Americans spent millions of dollars to create a pen that worked in space; the Russians just took a pencil...

DC, Don't be too quick to dismiss Russian ambitions here -  Constantinople and the Bosphrus: there's a long history involving their Black Sea Fleet based at Sevastopol.
EP    

Yes EP: Greece is building strategic links with BRICS to leverage its position with traditional EU countries.  Greece has the option of being the Euro face for China and Russian goals in the Eurozone and in the Middle East.  

Desperation

And by the way, if you are a saver, be thankful you have a term deposit in New Zealand. .  Thankful to whom?
Savers are bearing the brunt of sharp cuts in deposit interest rates in excess of Reserve Bank changes after two of the country's big banks reduced rates further on key online savings accounts.
As financial markets bet the Reserve Bank will cut official interest rates on Tuesday – a move that would hit savers even harder – new figures show the major banks have lopped between 65 and 88 basis points off their online "bonus" saver rates in the past year.
The reductions are much deeper than the 25 basis point decline in official rates set by the RBA over the same period, and the extent of the cuts is pressuring savers and retirees to take more risk in search
 
...In fact the first condition was predicated on the second: that America would continue to dominate the global economy because its polity was sound. We have clearly blown that by rigging together a corrupt troika of banks, market swindlers, and captive eunuch officials who expanded the financial sector of the economy from 5 percent to more than 40 percent, largely by pillaging the middle class and destroying the basis of their income. Read more

Go Greece! Stick it to all the 'balanced budget' austerity-loving, financially illiterate morons. Oh and on a side note. Hahahaha @ savers.

"Greeks print Drachmas" ........... who did not see this coming ?
We have seen them kicing the can down the road since 2007 /2008
Kick the can long enough down the street , and evetually you run out of road , or enter a dead end ,   or come across  a dangerous motorway and hit 100 miles of bad gravel raod .
Hold onto your horses reigns boys and girls , because there is a big fall- out coming in the Eurozone as this mess unfolds .
I hope the NZ Super fund has been awake to this and has exited Northern European Bank stocks and Bonds.

More fuel on the Euro fire here:  http://www.bbc.com/news/world-europe-32202768 - Greeks claim hundreds of E billions additional German war reparations.
 

They can claim what they want, this was settled in 1984? or soemthing as final.
Ignorance it seems breeds by itself....
 
 

Drawing up plans to print dracmas  != printing dracmas.
This was commented on some yeras ago...now it could be a bluff to put preessure on the EU, or an actual path.  Even if they print it doesnt mean the will exit, also one shed load of dracmas of they do. time to buy gold for greeks maybe.