Dairy prices slip -2%; markets sanguine on US elections; Canada building permits edge up; China facing growing economic challenges; RBA optimistic; UST 10yr at 3.21%; oil and gold lower; NZ$1 = 66.7 USc; TWI-5 = 71

Here's our summary of key events overnight that affect New Zealand, with news China is at a bit of a crossroads economically.

But first today, the overnight dairy auction is piling on some pressure on the industry. It came in with a -2% overall result, but in New Zealand dollars overall prices were down -3.2%. That means overall prices are now -12.5% lower in US dollars than this time last year and down -9.5% in New Zealand dollars. The key WMP price is down almost -3% today and this is important because more than half the product being auctioned is WMP. WMP prices in New Zealand dollars sank below $4,000/tonne for the first time in 2018 and only the second time since October 2016. The quantity sold of 42,412 tonnes was the highest since August 2015. But don't forget that auction sales only account for about 30% of Fonterra's sales volume. And other dairy companies offer product in these auctions. Today's auction result won't be helping farmgate milk prices.

In the US they are voting in mid-term elections. Results won't become clear until much later today. The S&P500 however is up +0.6% and the UST 10yr yield is up. Investors don't seem nervous about how it will turn out.

In Canada building permits edged higher in September reversing a downward track the month earlier, and came in above analysts expectations. Non-residential gains were stronger, but residential permits rose more than expected as well. Despite this, September 2018 levels are still -0.5% lower than September 2017.

In China, and it a bit of a backtrack from yesterday, a senior official has said that they will talk to the Americans about trade and respond to American criticisms.

And closer to home, their central bank has said it is worried about the sharp spike in short term consumer loans. They grew by +20% in 2017 and authorities worry about the stress this is imposing on people buying things with money they don't have.

Further, the head of an influential state-backed think tank has forecast that China’s economic expansion may be entering a long-term “downward spiral” as all three engines of growth - investment, exports and consumption - slow down. And international investors are growing tired of empty Chinese 'reform' declarations.

Growth strengthened in the world's services sector in October in a giant survey released overnight. In fact, it was revealed that activity is rising at a faster rate, new business growth is stable, and input prices are rising faster. This October result was the first improvement in four months. Now Italy is the only country contracting.

Yesterday, the RBA left its official rates unchanged yet again but its outlook was decidedly upbeat. It forecasts faster economic growth for Australia and that by 2020 their unemployment rate will fall to its lowest level since the GFC. The RBNZ will give it's assessment on Thursday and if it is also as upbeat, the chances that the next rate change here will be a rise will go up.

The UST 10yr yield is up +1 bps at 3.21%. Their 2-10 curve is at +29 bps. The Aussie Govt 10yr is at 2.73% (unchanged), the China Govt 10yr is at 3.54% and down -2 bps, while the NZ Govt 10 yr is at 2.67% and unchanged today.

Gold is down another -US$3 overnight to US$1,226/oz.

US oil prices are sharply lower today to just over US$61.70/bbl, a fall of about -US$1.50/bbl. The Brent benchmark is now over US$71.70/bbl also sinking.

The Kiwi dollar is starting today a little firmer at 66.7 USc. On the cross rates we are unchanged at 92.4 AUc, and the same at 58.4 euro cents. That leaves the TWI-5 at 71 and near its three month high.

Bitcoin is now at US$6,442 which is virtually unchanged from this time yesterday. This rate is charted in the exchange rate set below.

This chart is animated here.

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