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US trade gap narrows, ECB cuts growth and inflation forecasts, IMF worried about global economy, Aussie dollar on downhill slide; UST 10yr yield 2.16%; gold lower; NZ$1 = 64.0 US¢, TWI-5 = 68.8

US trade gap narrows, ECB cuts growth and inflation forecasts, IMF worried about global economy, Aussie dollar on downhill slide; UST 10yr yield 2.16%; gold lower; NZ$1 = 64.0 US¢, TWI-5 = 68.8

Here's my summary of the key events overnight that affect New Zealand.

The US trade balance has improved more than expected, with its deficit for July falling to its lowest level in five months.  

The trade gap narrowed 7.4% to US$42 billion, as demand for US-made auto and industrial supplies increased, while US demand for pharmaceuticals and mobile phones declined.

This provides a ray of hope the US economy isn’t hurting too much from turbulent financial markets and economic uncertainty around the world.

Other data out overnight shows the number of Americans seeking first-time unemployment benefits rose last week, despite the overall level remaining consistent with steady job creation.

All eyes will be on the US non-farm payrolls report out overnight. If markets weren’t as turbulent as they are, this employment report would have been the Federal Reserve's last good economic signal before deciding whether to raise interest rates in two weeks’ time.

The European Central Bank has cut its growth and inflation forecasts. It’s concerned China’s troubles will pave the way for an expansion of its already huge 1 trillion-euro plus asset-buying programme.

Leaving interest rates unchanged, its warned a slowdown of growth in emerging markets like China, as well as falling oil prices, could drag the euro zone back into deflation in coming months.

These economic jitters have sparked the International Monetary Fund to call for “strong mutual policy action” ahead of a G20 leaders meeting this weekend.

While the IMF says economic uncertainty could lead to a "much weaker outlook" for growth around the world, it still expects the global economy to expand by 3.3% this year. It grew by 3.4% last year.

Across the ditch economists are expecting the Aussie dollar to keeping falling against the US, as China’s slowdown dampens demand for Australian commodities. The currency hit a six-year low against the US on Wednesday.

Today, the New Zealand dollar is up nearly a cent against the Australian to 91.2 AU¢. It’s also up nearly a cent to 57.5 euro cents, and has strengthened to 64.0 US¢. The TWI-5 is up 6bp to 68.8.

In New York, the UST 10yr yield benchmark is down slightly today to 2.16%.

The US benchmark oil price is up again to just below US$47/barrel, while the price of Brent crude has also inched up to US$51/barrel.

The gold price has dropped again to US$1,124/oz.

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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End of day UTC
Source: CoinDesk

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