US jobless claims fall sharply; VW and Mitsubishi face the music; ECB holds rates, defend policies; AU and US clamp down on bank behaviour; UST 10yr yield 1.88%; oil up, gold down; NZ$1 = 69 US¢, TWI-5 = 72

Here's my summary of the key events overnight that affect New Zealand, with news regulators are toughening on banks.

But first, in the US the number of Americans filing for unemployment benefits unexpectedly fell last week as their labour markets continue to improve, hitting its lowest level since 1973. The data was strong enough to move markets today. Both the US dollar and wholesale interest rates firmed on the news because it makes a Fed rate hike more likely.

Volkswagen and the US Justice Department have agreed on how the carmaker should respond to its fuel economy fraud; VW will either need to fix the 600,000 infected cars or offer to buy them back. It may cost VW up to US$10 bln to settle this issue. This deal will become a model for how other jurisdictions handle these issues. Meanwhile in Japan, Mitsubishi has been caught doing something similar - and over a very long timeframe too.

ECB President Mario Draghi earlier today warned that eurozone inflation could go negative. He was on the defensive today, making the case for both his policy stance, and for his independence from political; pressure. German Chancellor Angela Merkel has weighed in on criticism of the ECB policies. At today's policy meeting they left rates and settings unchanged.

In Australia, their government has extracted a promise that banks there will not pass on the costs of new fees required of them by to strengthen the regulation of their banking system. The fear was that banks were just going to pass on those costs to their customers.

And in more banking news, American regulators want to require their largest banks and financial firms to hold back executive bonus pay for four years. They also want a minimum period of seven years for the biggest firms to “claw back” bonuses if it turns out an executive’s actions hurt the institution.

In New York the benchmark UST 10yr yield is a lot higher today at 1.88%.

The oil price rose slightly overnight to just over US$43/barrel in the US, while Brent is now just over US$45/barrel.

The iron ore price keeps rising strongly and is now over US$70/tonne as Chinese steelmakers raise production to take advantage of a spike in demand.

The gold price slipped slightly to US$1,249/oz.

And finally today, the NZ dollar opens at 69 US¢, down a whole cent in two days, at 89.3 AU¢, and at 61.2 euro cents. The TWI-5 index is now at 72.

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 ».