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US has skills gap; Fed officials talk up hike; air travel grows strongly; China leaks fx reserves faster; Aussie dairy industry shrinks; UST 10yr yield at 1.54%; oil up, gold down; NZ$1 = 74.5 US¢, TWI-5 = 77.5

US has skills gap; Fed officials talk up hike; air travel grows strongly; China leaks fx reserves faster; Aussie dairy industry shrinks; UST 10yr yield at 1.54%; oil up, gold down; NZ$1 = 74.5 US¢, TWI-5 = 77.5

Here's my summary of the key events overnight that affect New Zealand, with news funds continue to leak out of China at a fast pace.

But first, data on American job openings surged to a record high in July, but a lag in hiring suggested employers were struggling to find qualified workers to fill the positions. The skills gap is becoming an important aspect of their labour market.

Wall Street is edging lower, perhaps because three Federal Reserve officials hinted (here, here and here) at an interest rate hike as soon as this month.

Perhaps today's Beige Book release helped them. It concluded their economy continued to expand at a modest pace in July and August, with most districts reporting tight labour markets and moderate growth in hiring.

More data out today shows strong growth in world passenger air travel which was up +5.9% in July, year-on-year. However, most of that is being driven by some remarkable growth in both India and China.

In China, their foreign exchange reserves dropped more than expected in August, hitting the lowest level since December 2011, and showing that capital outflows remain a problem. Their forex reserves stood at US$3.2 tln at the end of last month, down almost US$16 bln from the end of July, according to data released by the People’s Bank of China. The market was expecting a US$11 bln fall. This latest fall caps a huge outflow; China's foreign exchange reserves were almost US$4 tln in early 2014.

In Australia, the diary industry is on a rapid path of lower milk production. Some are talking of output "plummeting".

But at least housing affordability is improving there. The latest REIA/Adelaide Bank home loan affordability report shows that on average only 29.4% of household income is now needed to afford a mortgage payment in Australia. That is the lowest level in over seven years. In New Zealand, that equivalent level is 32.9%.

Internationally, the focus will shift to the ECB who will review their monetary policy settings tonight.

In New York the UST 10yr yield has stayed down 1.54% today.

The oil price has risen marginally today with the US benchmark price now just under US$45.50 a barrel, while the Brent benchmark just under US$48 a barrel.

The gold price however is lower, now just over US$1,344/oz.

The New Zealand dollar has pushed even higher today following yesterday's strong rises across the board. It’s now at 74.5 US¢, 97.1 AU¢ and 66.3 euro cents. The TWI index is now up at 77.5 a sixteen month high. In fact, the TWI is now more than +3% higher than when the RBNZ cut the OCR on August 11.

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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Source: CoinDesk

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10 Comments

"The TWI index is now up at 77.5 a sixteen month high. In fact, the TWI is now more than +3% higher than when the RBNZ cut the OCR on August 11."

Another way to state this is that the TWI is now more than +4% higher than it was on 11 June 2015 - when the RBNZ cut the OCR for the first time in this sequence. And there have now been 6 OCR cuts.

That's not to prove that the 7th OCR cut will also be a failure to lower the exchange rate - eventually it might lower the rate (economists can sometimes be right) - but also is likely to fuel the housing bubble even further.

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lets drop 1% next time, drop the dollar, burst the housing bubble, then in about a year we can get back to normal.
it will never happen we will keep dropping.25 every third or fourth time and stand around waiting for inflation to appear which wont with current government policies

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Wall Street is edging lower, perhaps because three Federal Reserve officials hinted (here, here and here) at an interest rate hike as soon as this month.

Open mouth operations are cheaper than reality.

Perhaps his speech was written and polished before all of yesterday’s data, including the ISM Non-manufacturing PMI, but even Reuters in writing a summary of William’s conjecture questioned his premise. It really isn’t a good sign for an economist/policymaker to have Reuters point out your inconsistencies (if only because they are now just that obvious):

A top Federal Reserve official on Tuesday repeated his call for gradual interest rate hikes, evidently unfazed by a slowdown in U.S. job gains and sluggishness in the services sector that now has traders betting against any rate hike at all this year…

In his prepared remarks Williams did not address the release of data on Tuesday that showed activity in the U.S. services sector had hit a six-and-a-half-year low, or government data last Friday that showed U.S. employers added fewer jobs than expected in August.

To further complete the contradiction, foreign manufacturers have by now completely tuned out “experts” like John Williams and Janet Yellen no matter how impressive sounding their credentials. To anyone in manufacturing and industry anywhere on Earth, it is absolutely clear by now that these economists know very little about the economy. Read more

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If the yanks have a skills gap well then maybe all those migrants with skills,such as chefs etc could go there as opposed to coming to nz.

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Given the TWi is currently at 16 month highs, against all forecasts, how feasible is a AUD/NZD rate at 0.90 in the coming 12 months.

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And in other news - Apple pay for ANZ has hit NZ shores. Good bye Eftpos.

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Why? some of us detest Apple and wont go near it ....hint Android. Hows your new no headphone jack dongle ...will you be purchasing with Apple pay?
Kiwis love EFTPOS and I notice more retailers taping off Paywave...good choice as its another clip of the ticket for merchants and as for security a very dumb idea.

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Oh look - a luddite.

EFTPOS has reached its expiry date.

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Ha nice come back ....EFTPOS works well, quick, and cheap...will be around for years but in the meantime go buy your Apple 7 and dongle so you can plug in your ear phones.
"Apple Pay's imminent move into the NZ market with ANZ comes with ANZ the only major bank in Australia "offering the contactless payments service to date."
Some of us dont bank with ANZ thank god....will carry on with EFTPOS

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I haven't used the headphone jack on the IPhone for ages... Bluetooth devices have improved significantly in the last couple of years - who wants wires everywhere.

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