Here's our summary of key events overnight that affect New Zealand, with news that while the US is abandoning its trade relationships, others are stepping up to broaden theirs.
Firstly, the American economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year. The jobs data had higher hiring rates in manufacturing, the participation rate was up +0.2% to (a low) 62.9% and average weekly earnings rose +2.7%. But even though more people are joining the workforce, they are not all finding work, yet. Their jobless rate rose to 4.0%.
In Canada, they reported pretty much the same thing; employment growing better than forecast, a rising participation rate, wages rising at +3.5%, ... and a higher jobless rate. The Bank of Canada is now expected to hike rates there soon.
But the trade wars officially got underway on Saturday. It was tit-for-tat with between the US and China, as it is between the US and Canada, and the US and many others - virtually everyone.
One practical outcome is that some commodity prices are falling substantially. Copper is down now more than -US$1,000/tonne since the first week in June as an example, a -14% drop in 4 weeks. But that just takes prices back to where they were this time last year such has been the run-up in the meantime. Aluminium has fallen -20% in 90 days, but again, that is off an unusual high and just reverting to more usual pricing.
Meanwhile, European member states have given the go-ahead for a free trade deal with Japan, the world's third-largest economy. Brussels said the agreement was sending "a very powerful signal against protectionism." If they can pull it off, it will cover about one third of global trade involving about 600 mln people.
Japan itself has now ratified the TPP. Japan is a key player in the multilateral free trade community. New Zealand is on track to do so too, by the end of 2018.
The UST 10yr yield is down -2 bps at 2.82% in a slip after Wall Street closed last week. And the US 2-10 rate curve keeps on shrinking as investors grow increasingly wary of the future and is now down to just +28 bps, and its lowest since 2007. The Chinese 10yr is at 3.54% (up +2 bps) while the New Zealand equivalent is now at 2.84%, up +3 bps.
Gold is unchanged at US$1,255/oz.
US oil prices are holding at just under US$74/bbl. The Brent benchmark is now just over US$77/bbl. The US rig count has risen a few this week.
The Kiwi dollar starts today a firmer at 68.4 USc which is more than +½c up from where we left it on Friday and its highest in ten days. On the cross rates we are also higher at 92.1 AUc and at 58.2 euro cents. That puts the TWI-5 at 71.5.
Bitcoin is now at US$6,747 which is up more than +4% from this time on Friday.
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