Obama starts push for Congress vote on TPPA; Mexico economy shrinks on low oil price; Aussie banks cut mortgage discounts; UST 10yr yield at 1.54%; oil and gold lower; NZ$1 = 72.7 US¢, TWI-5 = 75.5

Here's my summary of the key events overnight that affect New Zealand, with news the oil price is down -4% today.

But first in the US, as both presidential candidates campaign against it, the White House is negotiating with Republicans in Congress to ratify the largest regional trade agreement ever, the Trans Pacific Partnership. No vote will happen before the election, but cross-party negotiations are starting to get it approved just after the vote and before a new President takes office in January. This is a very American solution to a tricky problem and while the odds may seem long, it is instructive that this is a key priority of a popular President. Clearly, the Republican congressional leadership and the President see it as a realistic possibility.

South of the border, Mexican economic output fell -0.2% in the June quarter from March, its first decline in three years as a sluggish industrial sector offset continued gains in services. Falling oil output has been one of the main drags on their economy. However, their economy was +2.5% higher than the same quarter a year ago.

They are not the only ones being hurt by the lower oil price. The state oil company in Malaysia has seen it profitability evaporate.

In Australia, their big banks are feeling margin pressure, mainly because most of their mortgages are on a floating rate basis and the funding for that differs markedly from the way their New Zealand subsidiaries fund their mortgage book. The Aussie banks response has been to pull back on the generous set of institutionalised discounts that have become embedded in their systems. These are now being wound back. On this side of the ditch, the embracing by borrowers of fixed rate terms insulates us somewhat from these types of 'make-the-customer-pay' strategies.

Aussie banks base their mortgage funding on the BBSW (bank bill swap rate, a bit like our 90 day bank bill rate). The BBSW was the mechanism that they are being accused of illegally manipulating. And despite their denials, a Judge in the court case being brought against them has scolded the banks for their attempts to avoid trial. It is not only ASIC who is suing them over this issue. Home loans in Australia are worth about AU$1.4 tln; there is a lot at stake in this effort to clean up banker behaviour and any loss in the case could hit banks hard.

In New York, the UST 10yr yield is lower at 1.54% today.

The US benchmark oil price is lower as well, falling nearly $2/bbl to just under US$47/barrel and the Brent benchmark is just over US$49/barrel.

The gold price is down too, to US$1,338/oz.

But the Kiwi dollar will start today unchanged from this time yesterday at 72.7 US¢, at 94.4 AU¢, and at 64.2 euro cents. The TWI-5 index is at 75.5.

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 ».