Dudley waits, but warns on hikes; services strong worldwide; EU holds its nerve after Italy 'no' vote; Aussie retailing booms; UST 10yr yield at 2.37%; oil up, gold down; NZ$1 = 71.3 US¢, TWI-5 = 76.9

Here's my summary of the key events overnight that affect New Zealand, with news markets are absorbing the implications of the 'no' vote in Italy.

But first, the American election result has created "considerable uncertainty" over the policies the new Administration will pursue but it is too soon for the Federal Reserve to judge whether its plan for gradual interest rate hikes needs adjusting, according to one of the key voting members. He went on to say that a strong fiscal stimulus program might in fact speed up the Fed' s rate hike plans.

But in the meantime, the US economy rolls on. Today we got data on its giant services sector and both sources showed it expanding fast in November.

The Chinese services sector also expanding faster, and together with the US, that is driving the fastest expansion in services worldwide in a year.

In Europe, financial markets held their nerve after Italian voters decisively rejected changes to their country’s Constitution intended to speed government decision-making and spur Italy’s stagnant economy. In part, that was because polls had predicted the “no” vote, giving investors time to adjust, and also because political instability in Rome is not exactly unusual. But the potential for market turmoil is still there if there is a long period of government paralysis and delayed plans to fix Italy’s ailing banks, whose shares fell sharply overnight.

One thing that may reverberate here from the Italy situation is that sovereign bond yields may rise (causing conservative bond investors losses).

In Australia, they are expecting their biggest holiday retail season of all time. Revenue growth may be faster online, but it turns out margins are great in Aussie bricks-and-mortar retailing, so much so the main threat to their retailers is the arrival of foreign-owned physical stores chasing that higher margin.

The Aussie property market is changing too, and banks there are raising rates, boosting margins.

Meanwhile, the RBA will review its policy rate today, but no change is expected.

In New York, the UST 10yr yield rose for much of the trading session there but is now lower, at 2.37%.

Oil prices are up again today, now at just under US$52 a barrel for the US benchmark, while the Brent benchmark is now just under US$55 a barrel. However, there are concerns in the market over OPEC's ability to restrain output as agreed and the early signs are not good. And, the US rig count climbed to its highest level in more than 10 months, and is set to grow by +30% in 2017.

The gold price fell sharply today in London, down to US$1,166/oz, but is clawing back much of that retreat in late trading in New York.

The New Zealand dollar will today at about the same level it was this time yesterday, at 71.3 US¢. On the cross rates it is at 95.4 AU¢, and against the euro up at 66.5 euro cents. The NZ TWI-5 index is now up at 76.9.

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 ».