US eyes on Fed, services stronger; China factory growth slows, retail growth underperforms, UST 10yr yield 1.98%; oil unchanged, gold down; NZ$1 = 67.5 US¢, TWI-5 = 71.2

Here's my summary of the key events over the weekend that affect New Zealand, with news attention is turning to some big announcements on Thursday this coming week.

But first, Wall Street ended last week on a bullish note with equities up more than +1.5% with broad-based gains. These followed a positive day on Friday on Asian and Australian equity markets.

This is a week where a number of central banks will review rates, none more important than the US Fed on Thursday. Markets are not expecting a rate hike this time, but they are expecting two more in 2016.

It's also a week where the growth rate for the New Zealand economy will be announced on the same day. Markets are expecting a Q4-2015 rate of +2.1%. And the day before. we will get the Q4-2015 current account result, which is expected to show a -3.3%-to-GDP deficit, unchanged from prior periods. Low, not-worsening, and not-getting-better either.

In the US, official data out late last week shows that their services sector growing well, up +2.1% in Q4-2015 from the same period a year ago. Their IT industry was up a sparkling +4.8% over the same period. Real estate and leasing was up even more at +7.7%, arts and entertainment up +7.4%, education up +4.4%, and the health sector up +3.5%. Laggards included public administration which was down -2.3% and transportation down -1.7%.

In contrast to the US, China's activity data remained weak in the first two months of 2016, with factory output growth hitting the weakest since the global financial crisis, and more policy easing is expected. The latest data shows industrial production up only +5.4%, its slowest growth in 3 years. It also shows weaker-than-expected retail sales growth. The head of their central bank commented that no big stimulus is needed yet, while the newly appointed head of their securities commission said he would act 'decisively' if faced with a similar panic that saw his predecessor dismissed.

In New York the benchmark UST 10yr yield is up yet again and will start the new week at 1.98%.

The oil price is basically unchanged at US$38/barrel in the US while Brent is at US$40/barrel.

The gold price fell sharply on Wall Street on Friday and is now at US$1,249/oz.

The NZ dollar will start the week noticeably higher after a strong finish to last week. The Wheeler rate cut effect only lasted two days. If the banks aren't passing on all the cut and the exchange rate doesn't drop, it is hard to see any practical impact from cutting the OCR. The NZD starts the week at 67.5 US¢, at 89.2 AU¢, and at 60.5 euro cents. The TWI-5 index is back up to 71.2.

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 ».