US payroll growth slips; service sector gives mixed signals; Canada data mixed; German orders fall; Switzerland shines; China banks wary; UST 10yr at 2.88%; oil down and gold up; NZ$1 = 65.9 USc; TWI-5 = 69.7

Here's our summary of key events overnight that affect New Zealand, with news markets are growing wary as data and policy signals are getting a bit volatile.

First, we have an American non-farm payrolls report due out tomorrow, and today ADP released its version, and that was something of an unexpected surprise. Markets were expecting it to show a +200,000 jobs gain and just below the +217,000 gain it reported in July, but it came in at just +163,000. Analysts are expecting tomorrow's non-farm payrolls report to show +195,000 and will be on tenterhooks now.

There were two reports out overnight claiming to measure the state of the giant US service sector. The first, traditional one brought in a blockbuster result with its services PMI up to an almost unbelievable 58.5 index level, a jump of +2.8 points on strong new order gains. But measuring the same sector in a similar way, the Markit services PMI was much less enthusiatic, recording a weaker new orders upturn and the overall expansion easing. Take your pick. The Markit survey uses the same basis as most other international survey and they report service sector business activity slowing globally. The China report also recorded a slowing of its expansion in August.

In Canada analysts were expecting a rebound in July from the unexpected decline in building permits, but they didn't get it. They were down again in July. While teh Vancouver housing market is in the doldrums, the Toronto market is showing signs of vigour. Sales, listings and prices are all up with healthy gains.

In Germany, factory orders fell for a sixth month, surprising many because a rise in July was anticipated. A slump in export demand from growing trade tension is clearly biting Europe’s largest economy.

We don't report on Switzerland very often, but today we need to report that the Swiss GDP growth for the June quarter came in very strong, up +3.4% a big improvement on the March +2.9% rate. Interest rates may be rising there soon.

On Wall Street, a tech selloff is building. The NASDAQ is down -1% so far today, and that accumulates a -2.5% drop for the week. And there is a growing selloff in Asia with most markets down a chunky amount. These sentiment shifts are bringing a risk-off mood to markets today.

And speaking of risk-off, yesterday we reported that China's policy makers relieved banks of restrictions on lending to local authorities in an effort to boost flagging economic activity. But today we can report most banks are very wary of the new instruction, fearful they will be left with increasing non-performing loans, and are unlikely to raise such lending. Quiet resistance, with Chinese characteristics.

We should also note that swine fever is now reported in six Chinese provinces, all in the populous east. The spread is a serious concern in China, even if it is not widespread yet. Even the UN's FAO is showing alarm.

The UST 10yr is down to 2.88% and their 2-10 curve is tighter today at just under +24 bps. The Aussie Govt 10yr is at 2.56% (up +1 bp), the China Govt 10yr is at 3.63% and down -1 bp, while the NZ Govt 10 yr is at 2.56%, down -2 bps.

Gold is up another +US$3 and is now at US$1,199/oz. But the World Gold Council is reporting that gold ETFs lost investors for the third consecutive month.

US oil prices are down another -US$1 today and now just under US$68/bbl. The Brent benchmark is now just over US$76.50/bbl.

The Kiwi dollar is unchanged at 65.9 USc. On the cross rates we are little changed also at 91.6 AUc, and at 56.7 euro cents. That puts the TWI-5 at 69.7.

Bitcoin is down again and now at US$6,428 and a drop of -7.3% on top of yesterday's -6.2%. In NZD terms, it is back under NZ$10,000. Easy come, easy go. This price is tracked in the exchange rate 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 ».