BoE holds interest rates but turns hawkish; Italy rocks the boat on immigration ahead of talks over the weekend; Shanghai Composite closes at 2-year low; Ardern in the spotlight; UST 10yr at 2.91%; oil and gold down; NZ$1 = 68.9 USc; TWI-5 = 72.2

Here's our wrap of what's happened around the world overnight.

As Melania Trump gets sent to the US-Mexico border to visit a detention centre, immigration tensions continue to rise in Europe. Italy’s populist far-right interior minister is calling on the European Union to “defend its border”. He says Italy is ready to “renegotiate” its financial commitments to the bloc if more isn't done to curb Italy's migrant problems.

French President Emmanuel Macron has hit back, saying this rhetoric betrays European Union values. Yet Macron's calls are said to only be adding fuel to the fire, as European leaders are due to meet for immigration talks this weekend. German Chancellor Angela Merkel is under the pump to secure an EU deal on internal migrant flows to avoid her interior minister turning away migrants at Germany's border. 

The Bank of England has left its current bank rate at 0.5%, but signalled an August rise is more likely than previously thought. Three of the bank's nine-person committee, including its chief economist, voted to raise the rate. This split has seen the value of the pound rise, and UK equities fall, as a stronger currency erodes the value of overseas earnings. 

The Shanghai Composite closed at a two-year low on Thursday, as gains made earlier in the day ended up being short-lived. While the market found some solace in Chinese authorities saying they would use monetary policy tools to steady the economy, caution sparked by the China-US trade spat prevailed. Losses were led by tech firms.  

The Philadelphia Federal Reserve’s gauge of US Mid-Atlantic business activity fell to a one-and-a-half year low in June, as the index experienced its steepest month-on-month fall in more than four years. While the broad indicators remained positive, indicators for general activity and new orders fell notably. The firms continued to report higher prices for purchased inputs and their own manufactured goods.

And finally, good wishes from around the world have been flowing to Prime Minister Jacinda Ardern and her partner Clarke Gayford, following the birth of their baby girl yesterday afternoon. Ardern is only the second serving prime minister in history to give birth. The situation sends a strong signal that both women and men can choose how they wish to juggle family and career commitments. 

The UST 10yr yield is down slightly to 2.91%.

Gold has fallen to US$1,268/oz.

Oil is also down a little ahead of an APEC meeting. US crude is at US$66/bbl, while the Brent benchmark is at US$73/bbl.

Little movement in the New Zealand dollar overnight. It's slightly stronger at 68.9 USc, but remains at 93.1 AUc and 59.2 euro cents. The TWI-5 remains at 72.2.

ANZ economists expect the kiwi to continue to trade in a defensive manner. With the economy showing signs of cooling and global risk sentiment jittery, they say it’s hard to be too positive.

The price of Bitcoin has fallen to US$6,701.

This chart is animated here. For previous users, the animation process has been updated and works better now.

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

Daily exchange rates

Select chart tabs »
The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

22 Comments

up
10

with the dollar fall , will we see a much bigger hike in petrol prices on the first of july
if we think things are slowing in NZ wait until petrol reaches $3

up
11

The NZD could easily fall to a new lower level, following other minor currencies worldwide. The USD is drawing money back as LIBOR rises inexorably higher. Petrol at $3 is a scary thought. That would show Labour's clever tax rises in a whole new light. It would also throw the Auckland Socialist City State a bit of a curved ball too. Obviously we need more immigration to build houses for the 26,000 Auckland homeless. It is of course verboten to point out that immigration causes homelessness. I was shocked how many young men were living on the streets in the UK when I went there last winter.

26 September 2017 TWI 76.08
21 June 2018 TWI 73.01
Change – 4%

26 September 2017 USD/NZD 0.7242
21 June 2018 USD/NZD 0.6844
Change – 5.5%

26 September 2017 Brent Crude USD 58.43
21 June 2018 Brent Crude USD 72.89
Change + 24.75%

Doesn’t look that good for commuters. Oh well, at least the COL didn’t allow taxes to increase /sarc

up
12

We don’t need more immigration, instead we need targeted immigration. We import a whole lot of skills we don’t actually need, and then the migrants are left to take up jobs in fields without shortages by lowering their wage expectations and replacing locals in that process.
The general skill level among migrants has been falling in the past few years.
The majority of migrants on temporary visas work have no engineering, medical or construction knowledge. The most popular courses among international students are business and commerce.

its not surprising UK has a growing homeless problem...

https://surplusenergyeconomics.files.wordpress.com/2018/06/129-stats-ann...
https://surplusenergyeconomics.wordpress.com/2018/06/20/129-why-what-how/

"Looking back at the British chart, for instance, you’ll readily appreciate why customer-facing sectors such as retailing, pubs and restaurants are going through a fire-storm of failures and closures. Contrary to ‘expert’ opinion, this melt-down owes very little to “Brexit” (yet, anyway), and almost everything to the erosion of customers’ ability to spend...

To get from GDP to prosperity, then, two stages are involved. The first is to arrive at a ‘clean’ GDP number by removing the distortions introduced by pouring cheap credit into consumption. The second is to deduct ECoE from this underlying number.

The results show a deterioration in prosperity across all major Western economies other than Germany. Typically, Western citizens are getting poorer at rates of between 0.5% and 1% annually...

Shanghai , going down, down

https://www.bloomberg.com/quote/SHCOMP:IND

A broader view:
https://www.bloomberg.com/markets/stocks/world-indexes/asia-pacific
11% down for the month. Ouch.

I've added in a couple of sentences about this. Cheers.

My book of the week is something a bit different, an audio book, I’m not a great fan of audio books but this is an absolute cracker, five star stuff. With Sth Africa in the news these days, I thought recommending it was timely.

‘ Day of the Dead moon’, by David Rattray. It’s on Spotify, so borrow your child’s phone or laptop and have a search, or you can buy it to download at this link;

https://www.dayofthedeadmoon.com

If you don’t have any luck I can send you my copy, just get my email of David C.

https://www.goodreads.com/book/show/17319784-the-day-of-the-dead-moon?fr...

I don't have a child but own a laptop and even have spotify installed, not bad for an oldy ah?

I'm nearing 40 and haven't bought a physical CD or audio book for nearly 10 years (since the launch of spotify et al). My Kiwi father in law (71) followed only a few years behind. He has more apps on the go than I do ;-)

I know a few 80 year olds who manage their own IT services company and do much of the engineering & code themselves. I tend to bemoan the artificially created stereotype to encourage discrimination against older workers. Sure there is a skills learning period and workers often need to retrain, (in their own time), but companies widespread dumping them & pouring in migrants so they can avoid any training hurts both young and old. Not to mention chances of employment past a certain age are slim. We would benefit far more with a culture used to training & retraining with a company. Pity we end up now with population issues we created and skills issues (shoddy work, little employment, no training/retraining or costs placed more on on workers who cannot afford them, employment laws run roughshod, and population pressures not being managed with infrastructure & services not able to cope with demand). Amazing how a few stereotypes & employment environment changes can screw multiple generations at once.

Are you trying to be funny Andrew?

From The specuvultures

Cash is always king.
Thoses of us that went thru the GFC, know that.
The trouble being is banks arn't particularly keen on sacks of cash.
Even if you can verify it's provenence.

The value of cash is 1:1 less the hassle of handling. It’s far easier to make money from transacting and lending in binary.

But done in the right amounts it is untraceable. Which is what cash should be.
Ain't no banks buisness to know where you spend every dime.

Have to just say. I originally came to this site for the content, but I stay for the comments - always entertaining, occasionally informative, but never ever dull.

Not sure how a book about Zulus relates to the content today, but each to their own.

What stood out to me today was the bickering in Europe - I find it hard to believe those countries will ever agree on anything.

up
10

To be honest, I am probably more interested in a book on zulus than Jacinda’s baby

you will have to listen to find out.

Something to do with wildly underestimating the danger or a situation?

I take that back - thanks for that link Uninterested; sooo much red in the Asia markets - China looks positively bloody...