Eyes on Fed and ECB; Canada data surprises, China inflation rises, trade surplus falls; Argentina gets IMF backing; Swiss voters clear; UST 10yr at 2.95%; oil down and gold up; NZ$1 = 70.4 USc; TWI-5 = 73.1

Here's our summary of key events over the weekend that affect New Zealand, with news that is important over a wide set of issues.

Firstly, both the US Federal Reserve, and the ECB have important meetings this week. The Thursday (NZT) Fed meeting is expected to bring another +25 bps rise to 2.00%. But it could also signal that it is done for a while now and that would be a shift in market expectations.

Meanwhile the ECB meeting the next day was originally expected to signal the start of a pullback in their ongoing money-printing. But weaker than expected recent growth data may see that postponed.

Emerging markets will be on tenterhooks for both outcomes. They are showing they can't hack the consequences of higher interest rates, so any pullback by either or both will be seen as a reprieve for them. Japan is also reviewing its monetary policy settings, but no change is expected there.

These moves will come as the world digests the impacts of the reinvigorated Trump isolationism, all based on 'facts' so alternative they rightly deserve the scorn they are receiving. As others have said, the G7 meeting was a Trump train-wreck.

In Canada, their May employment data showed a surprise loss of jobs. But wages there rose at an unexpectedly quick pace, up overall +3.9% year-on-year. Within that, female wages rose +4.1%. Wages for non-unionised employees were up +4.5%. These are impressive gains.

And Canadian housing starts surprisingly fell in May compared with the previous month as multi-unit urban starts declined, principally because multi-unit housing starts in Toronto slumped. Developers there are retreating after some public policy changes and a bad sign for price containment.

China’s trade surplus shrank sharply in May on strong imports. The overall monthly surplus was down to +US$24.9 bln and well below the +US$32.6 bln analysts were expecting. But the gap with the US widened, representing 98% of the total monthly surplus. Advance shipments to the US ahead of possible new arbitrary tariffs may be behind the unusual data.

In China, May inflation data was released showing their CPI held at +1.8%, China's PPI rose to +4.1%, confirming the recent downward trend is over.

Argentina and the IMF have agreed on a three year deal to lend it US$50 bln to help it deal with its currency and reform crisis. They say they will draw on the first tranche of the loan, but the rest is just for emergencies. Part of the deal requires the country to reduce its fiscal deficit to zero by 2020. This deal gives President Macri the cover to make some tough choices to rein in crippling inflation and bloated public spending.

And over the weekend Switzerland voted down its 'sovereign money' referendum. It was rejected by a surprisingly large margin - 76%, and far greater than recent polls suggested (55%). At the same time, the Swiss approved a ban on foreign online betting sites. The online gambling wave sweeping the world is not a positive thing according to another surprisingly large plurality of Swiss voters (73%).

The UST 10yr yield is at 2.95%, up +1 bp. The Chinese 10yr is at 3.69% (unchanged) while the New Zealand equivalent is now at 3.02% and that is up a very chunky +15 bps and resetting the relative positioning of NZGB pricing. Holders have taken huge losses here. If it holds at this level, some conseravtive KiwiSaver funds will be sweating it.

Oil prices are down today and the US price is now under US$66/bbl. The Brent benchmark is now under US$76.50/bbl.

Gold moved marginally higher over the weekend, up +US$2 to US$1,299/oz.

The Kiwi dollar will start today little-changed at 70.4 USc. On the cross rates we are higher however at 92.6 AUc, and 59.8 euro cents. That puts the TWI-5 at 73.1.

Bitcoin is now at US$6,725 which is -12.5% down from where we left it on Saturday. This is a substantial fall, taking the NZ$ price well below $10,000 and overall prices back to where they were in November 2017. A South Korean hack is behind the sudden drop.

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The easiest place to stay up with event risk today is by following our Economic Calendar here ».