Here's my summary of the key issues from over the weekend that affect New Zealand, with important news from China.
A few hours ago China's central bank cut interest rates for the second time this year and the third in six months, amid a continuing economic slowdown.
"China's economy is still facing relatively big downward pressure," the PBOC said.
It lowered its benchmark rate one year lending rate by 25 basis points to 5.1%, saying the move was aimed at boosting development.
The cut has come after weaker-than-expected April trade and inflation data. In fact, with inflation at 1.5% their new lower benchmark deposit rate of 2.25% is still showing a positive real return for Chinese savers. And in the detail this 'cut' came with more flexibility on what banks can pay actually depositors, a switch that could create a drag on how fast rates really fall.
All may not be so rosy in India either. The Indian currency weakened to a 20-month low against the US dollar at the end of last week as foreign investors pulled funds out of the country. There is increasing concern that disappointing economic policy and rising oil prices could hurt growth in Asia’s third-largest economy. The Modi miracle is still just a wish.
In the US, American job growth bounced back up in April and their unemployment rate dropped to a seven-year low of 5.4%, suggesting underlying strength in their economy after a tepid first quarter that could keep alive prospects for a Fed rate hike later this year.
In Europe, tomorrow night is a key point in the current Greek debt saga. The Greeks need to pay the IMF €770 mln and there are reports that the Greek governments attempts to corral many Greek institutions to hand over their 'spare' cash is facing stiff resistance. The Athens government itself does not have the funds and whether it can come up with them will be a close run thing. In the meantime, it is boosting their public payrolls.
Across the Tasman, all eyes are on the next budget from the Australian Federal government. One thing that will be closely watched will be how they respond to profit-shifting by multi-national companies, and whether they will bring in any new measures to protect their tax base from international e-commerce - a 'Google-tax'. New Zealand is very likely to follow any Australian initiatives.
On Wednesday, the RBNZ will deliver its assessment of New Zealand financial stability.
In New York, the UST 10yr benchmark yield gave up quite a bit of its gains and is now at 2.14%, and that is despite the relatively good employment data. Basically the bond market's doubts about a 2015 rate hike rose.
The US oil price also fell and is now at US$59/barrel, while Brent crude was lower too at US$65/barrel in Friday's trading. Still-surging supply is undermining price growth.
The gold price is at US$1,187/oz. And readers following the price of copper will have noted a +20% rise in the metal since late January and prospects for the red metal seem improved just as those for iron ore seem to sink.
The New Zealand dollar starts today marginally higher at 74.9 US¢, lower against the Aussie at 94.2 AU¢, and at 66.8 euro cents. The TWI-5 is at 78.2.
If you want to catch up with all the local changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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