Here's our summary of key events overnight that affect New Zealand, with news the rollback of GFC money printing has now reached Europe.
The ECB has announced it will stop its bond buying by the end of 2018. But it also said it will retain its negative interest rate policy by waiting “at least through the summer of 2019” before raising it from its current -0.4%. That stance is branding the ECB 'dovish' today. Bond rates fell.
Meanwhile in the US, May retail sales have come in far better than markets were expecting, recording their biggest monthly rise since November 2017.
However, the IMF is pointing out the economic boost from last year’s American tax cuts will fade in 2019 and 2020, and their economy will then slow considerably. This report, more than the retail sales jump, is weighing on market sentiment.
Canadian new home prices remained flat for the second month in a row in April as higher interest rates and tougher mortgage regulations, and local restrictions curbed buyer demand. Toronto prices are falling but Vancouver prices are holding and haven't budged all year.
On trade, earlier this year the EU and Canada agreed a deal, but one that is yet to be ratified by all EU members. However, the new Italian government is now threatening to kill it. The key issue seems to be around origin labeling.
And after getting China's essential help forcing North Korea to the nuclear bargaining table, the Americans are about to punish them with new tariffs, which will be announced tomorrow. Tariff retaliation from the EU is also about to be announced.
In China, some key data out of China has come in soft. Retail sales sagged far more than expected. And industrial production data also come in lower than expected.
China's central bank has kept its policy rates unchanged in the face of this softness. In the past they have followed the US Fed, but not thgis time.
On the climate front, an American agency is saying that El Niño is due to return in about six months.
The UST 10yr yield is down to 2.94% following the ECB statement, and probably more importantly, the IMF report. The Chinese 10yr is at 3.68% (down -3 bps) while the New Zealand equivalent is now at 2.99%, down -4 bps.
US crude oil prices are up a little again today and now just under US$67/bbl. The Brent benchmark has gone the other way falling to just over US$76/bbl.
Gold is up +US$7 at US$1,302/oz.
The Kiwi dollar has risen against all the majors today except the greenback. We will start today down at 69.8 USc. But on the cross rates we are firmer at 93.2 AUc, and 60.2 euro cents. That keeps the TWI-5 at 73.2 and still in its very tight June range.
Bitcoin has also risen and is now at US$6.650 which is +5.6% above the price at this time yesterday.
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