90 seconds at 9 am: NZ$/US$ at 6-year low

NZ$ low against US; US service industry activity surges, imports rise and private jobs growth slows; Greece upbeat on loan progress; UST 10yr yield 2.28%; NZ$1 = 65.2 US¢, TWI-5 = 70.3

6th Aug 15, 8:02am by Jenée Tibshraeny

Here's my summary of the key events overnight that affect New Zealand with news the NZ$ has fallen to a six-year low against the US$.

A mixture of data has come out of the US overnight, sparking debate around Federal Reserve interest rate hikes later this year. Service industry activity surged to a near-decade high in July, with new orders and employment spurring this increase.

A Commerce Department report shows imports rose in June, as the US's trade deficit grew by 7%, which is more than expected. An acceleration in domestic demand and a strong dollar sucked in imports of food and cars, while exports dropped for the second month in a row.

Thirdly, data from the payroll firm ADP shows private job growth slowed in July, largely due to layoffs in the energy industry and weaker job gains in manufacturing. These worse than expected results cast a cloud over the Labour Department's July jobs market report due out on Saturday morning (NZ time).

The Greek Prime Minister says Greece is close to concluding a deal with lenders on a multi-billion-euro bailout, which he says will end doubts over its place in the euro zone. His comments are the latest in a series of unusually upbeat assessments by Greek and European officials of progress in talks towards up to 86 billion euros in fresh loans.

And across the Ditch, the market is expecting July unemployment figures in Australia to inch up slightly from 6.0% to 6.1%. The stats are due out at 1.30 today.

In New York, the UST 10yr yield benchmark has bounced back up to 2.28%.

The US oil price remains in a massive slump at US$45/barrel. Brent crude is just below US$50/barrel.

The gold price has recovered slightly from yesterday, but remains weak at US$1,086/oz.

The New Zealand dollar is the lowest it's been against the US since July 2009. It's at 65.2 US¢, 88.5 AU¢, and at 60 euro cents. The TWI-5 is at 70.3.

If you want to catch up with all the local changes yesterday, 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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Source: RBNZ

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3 Comments

by Stephen Hulme | 6th Aug 15, 9:05am 1438808740

A Commerce Department report shows imports rose in June, as the US's trade deficit grew by 7%, which is more than expected. An acceleration in domestic demand and a strong dollar sucked in imports of food and cars, while exports dropped for the second month in a row.

Let's undertake a more rigorous review of the US trade data.

There was absolutely nothing good about the most recent trade data for June. Even what looked like an improvement really wasn’t, suggesting, strongly, that conditions in the global economy are still declining. With Canada falling to recession, blaming a “puzzling” and sharp decline in non-petroleum exports (the US as that nation’s biggest customer), the decline in US import “demand” completing now a full half year is simply confirming. Read more

by King of the whiners | 6th Aug 15, 9:27am 1438810050

Whilst it is good to see a debate finally getting started in NZ about migration (it might also be useful if we had a conversation about what our maximum sustainable population actually is), it is fascinating seeing what is occurring in the Mediterranean, as ever growing numbers or migrants seek to reach Europe from Africa and the Middle East. It is astonishing to see how rapidly the situation has got out of hand and how politicians seem incapable of dealing with the escalating crisis. What is most striking is the inability to extrapolate forward even a relatively few years and to draw the appropriate conclusions from trends that are clearly established. Thus two salient points:

a) Demographic models predict African populations doubling between now and 2050 - in effect an extra 1 billion people in Africa. Put simply Africa's population will be growing by well in excess of 10 million a year. The population of the middle east is also expanding very rapidly, and by 2050 there will be several hundred million more people in this region.

b) Climate change is predicted to have a disproportionately bad effect in Africa - the proportion of arid and semi arid land will increase by at least 5-8% (IPCC reports, Boko et al 2007). Predictions for the Middle East are similarly dire.

It should be obvious, given a) and b) where this leads, yet European politicians are unable to mount a coherent response to the issue even in its early stages.

by Spinach | 6th Aug 15, 10:15am 1438812946

Yep, with the advent of the internet and the ability of downtrodden populations to see the greener grass over the fence they are jumping it in their throngs. Largely not because they are under imminent threat as criers would sob to you about as they put their hand out, but because they prefer to jump ship than improve the governance of their country. I fear Europe will come to regret their soft capitulation to this.
Temporary protection visa's could help manage it. First it is a solid record and affords them prescribed rights. Second it is not permanent, no you have not migrated here, you and your family will be expected to return home when the shooting stops. Third it will alleviate all the bad things that come when illegal migrants go underground, crime and exploitation which already occurs.