China resists US trade pressure; Asia sharemarkets fall; US capital goods orders soften; England and Mexico review policy rates; UST 10yr at 2.99%; oil rises and gold drops; NZ$1 = 67.4 USc; TWI-5 = 71.1

Here's our summary of key events overnight that affect New Zealand, with news the New Zealand dollar is lower today, as the US and China fling trade insults at each other.

Firstly, China vowed overnight to retaliate if the United States acted on a threat to raise tariffs on their nation's exports, fueling fears in financial markets that the trade war between the world's two biggest economies would escalate. China reported that it imported nearly -60% less cars from the US in June as a consequence of retaliatory tariffs.

Share markets in Asia closed sharply lower on these fears. Tokyo was down -1%, Hong Kong was hit hard, down -2.2%, and the Shanghai index was down -2% yesterday. These are worrying retreats. (Wall Street is a little higher, especially on tech, celebrating the unique achievement of the Apple share price - even though Apple's products are losing market share.)

New orders for American-made goods rose for a second straight month in June, but business spending plans on equipment were not as strong as initially thought - in fact a surprising revision lower - suggesting a slowdown was likely in the third quarter.

All eyes are on the US non-farm payrolls report due out tomorrow morning.

In England, their central bank has raised their official interest rate for only the second time in a decade. The rate has risen by +25 bps to 0.75% - the highest level since March 2009. They made no other changes to their QE program, but they have left the door open to further hikes.

Mexico also reviewed its policy rate, keeping it unchanged at 7.75%. Their growth rate is under pressure, so the next move might be a cut there, the bank said. They don't have a QE program.

Global first-world inflation is rising. The OECD is reporting that its members recorded a +2.8% rise in June, up from +2.6% in May. It was rising +1.9% the same month a year ago, and +1.1% a year before that. The track is certainly higher in all our trading partners (and where we buy most of our imports from).

New Zealand car sales data for July is out and that shows another strong month. More than 8,000 cars sold in July was the highest level July since 1985. 65.7% of all cars sold were SUVs, second only to the June proportion. Commercial vehicle sales were an all-time record for a July.

The UST 10yr yield is at 2.99%. Their 2-10 curve has steepened slightly to +32 bps. The Chinese 10yr is at 3.49% (down -1 bp from this time yesterday) while the New Zealand equivalent is now at 2.83%, up another +1 bp.

Gold is down another -US$5 at US$1,215/oz in New York. An update from the World Gold Council who have published their Q2 statistical data may explain why. Demand was very soft in all gold markets and supply strong. In fact in the last year 438 more tonnes of supply were offered than demanded by customers. That is the highest supply overhang in four years. Further, demand from [third world] central banks was unusually low, the second lowest quarter in over seven years. Then there's this problem.

US oil prices have risen today and now are over US$69/bbl. The Brent benchmark is now over US$73/bbl.

The Kiwi dollar will open today significantly softer, down -½c at at 67.4 USc. On the cross rates we are little-changed at 91.5 AUc and at 58.2 euro cents. That puts the TWI-5 at 71.1.

Bitcoin is now at US$7,500 and little changed since this time yesterday. We track this rate daily in the interactive chart below.

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 ».