Here's my summary of the key events overnight that affect New Zealand, with news the NZ dollar is sharply higher.
Today's dairy auction brought higher prices, the third substantial gain in a row. Prices are up +7.7% in US dollar terms but up only +5.75% in New Zealand dollar terms. That is because the Kiwi dollar rose strongly on the news, up to 74.2 USc and its highest level in sixteen months.
There were good gains in price for most commodities - butter, cheese, skim milk powder - but WMP lagged at this auction, up only +3.7%.
Still, the cumulative impact is growing and overall, prices are back to levels we last saw briefly in March 2015, but were sustained in July 2014. Since March this year, prices have risen +43% in US dollar terms although only +27% in NZ dollar terms. Our currency tends to rise in concert with these dairy auction prices.
In the US, the closely watched ISM survey of services slipped sharply to its lowest level in more than six years. The only problem is that this survey is known to be a poor predicter of growth. The earlier Markit survey is more telling. But markets do react to the ISM version. The bottom line is that consumers are confident, their jobs market is solid, but business investment is the weaker point.
It is a similar story in Europe. Growth is up +1.8% pa, but it is low business investment levels that are restraining these economies.
The latest data out from airlines shows that airfreight volumes rose in July, up +5.0% from the same month a year ago. The strongest growth was in Europe and the Middle East, the weakest in Africa and Latin America. North America and Asia/Pacific grew in the high +4% range.
The Aussies left their benchmark interest rate unchanged at 1.5% late yesterday in their monthly review. It was Governor Glen Stevens swansong after ten years in the role. When he started, their benchmark rate was 6% and got as high as 7.25%, but it has been the standard slide since then.
And staying in Australia, Fitch is reporting that car loan losses are at a six year high - and that is only because their tracking started in 2010. The levels are not overly high, but they are rising quite quickly.
In New York markets are open again after their long weekend and trading shows the UST 10yr yield down sharply to 1.54% today. Equities however are up.
The oil price is pretty much unchanged today with the US benchmark price now just under US$45 a barrel, while the Brent benchmark just over US$47 a barrel. The recent brave talk of an output freeze agreement between Russia and Saudi Arabia, with Iranian backing, seems to have been a mirage.
The gold price however is much higher, up more than US$20 to just over US$1,347/oz.
The New Zealand dollar has pushed higher today as well on the good dairy auction result. It’s now at 74.2 US¢, 96.6 AU¢ and 65.9 euro cents. The TWI index is now at 77.1 and that is its highest level since May 2015. Good data next week on the current account and Q2 GDP growth is probably not going to hurt the Kiwi dollar either.
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 ».