Here's our summary of key events overnight that affect New Zealand, with news holiday season trading is starting and investors are on tenterhooks.
First up we should note that Wall Street is closed today for their Thanksgiving weekend holiday. However all eyes will be on retailer results, especially for Black Friday. Among those with most to gain or lose are Amazon, and the parcel delivery firms like UPS and FedEx. The S&P500 ended their short week down -3.2% with investors selling out of retail stocks ahead of the holiday season.
China and Russia are moving to build a currency exchange and payments system that does not use the US dollar as its base. This will be interesting to watch, as two manipulated currencies trade with the influences directed by officials in Beijing and Moscow. Likely, somewhere in a dark corner an independent reference to the greenback will lurk, especially if one side feels they are getting shafted.
The release of the latest ECB minutes shows they are determined to dial back monetary stimulus even as some board members saw growing risks to the EU economy. In fact, these minutes show that a new round of cheap, multi-year loans to banks is off their agenda.
Overnight a sizable retreat in EU consumer confidence was reported, building on a trend that has been running all year. Most of the good gains in consumer sentiment built up in 2017 have now been unwound, and the brief period where optimists exceeded pessimists in Europe is now a distant memory.
Overnight, the central bank of South Africa has raised its policy rate by +25 bps to 6.75%. They say it is on the way to 7.5% by the end of 2020.
More details of the Brexit plan were revealed overnight. The deal will keep the UK in "equivalence" with EU laws but allow the UK to do some limited trade deals on its own. It will also limit free movement of people, but embed deep regulatory and customs cooperation. Basically the UK will need to move in future in line with EU laws. The governments might be near a deal, but it is unclear whether this upgraded deal can pass the London parliament. The British currency rose on the news. And this.
The UST 10yr yield is unchanged at 3.07%. And their 2-10 curve is still just under +25 bps. The Aussie Govt 10yr is at 2.67% and down -3 bps, the China Govt 10yr is at 3.40%, unchanged, while the NZ Govt 10 yr is at 2.71% and also down -3 bps.
Gold is up +US$1 to US$1,227/oz.
US oil prices are as much as -US$1/bbl lower today. That puts them at only US$54/bbl. The Brent benchmark is also down, now just over US$62.50/bbl.
The Kiwi dollar is starting today little changed at 68.2 USc. On the cross rates we are a tad lower at 93.9 AUc, and at 59.8 euro cents. That puts the TWI-5 at 72.5.
Bitcoin is up today, now at US$4,445 and +1.2% higher than this time yesterday. This rate is charted in the exchange rate set below.
This chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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16 Comments
Bad luck for ACRL with RCR Tomlinson, so much for the value of a solvency certificate.
https://www.abc.net.au/news/2018-11-22/engineering-firm-rcr-tomlinson-g…
“China and Russia are moving to build a currency exchange and payments system that does not use the US dollar as its base.“
If they succeed and it works, the status of the USD as the worlds reserve currency would take a massive blow and all of a sudden their trillions of printed dollars could come back to bite in a big way. Maybe the above has something to do with China and Russia dropped US treasuries and increasing their gold holdings as well?
Here's the irony. No matter what currency pair you try to trade, it's all valued in...US$ - even if the US$ part of the equations cancel each other out, just like gold is, and bitcoin, and NZ$, Rubles and Yuan.
Take the US$ bit out of anything, and what's it worth?
No other medium of exchange can replace the US$ at this stage or for some considerable time.
Your country goes broke and your local fiat is worthless, what do you use? US$. There are umpteen examples of that all over the place right this very day...
Interesting, isn't it? My sense is that the essential part of the mechanism is the currency of debt. Meaning, if you have borrowed USD, directly or indirectly, then that is the most important thing. You can only repay the debt when it comes due by getting yer hands on the currency of the debt.
Hi bw, fair point but what about the switch from GBP to USD for reserve currency or Franc to GBP before that? A currency is the reserve until its not.
Roger makes a good point about paying back loans in the currency you’ve borrowed in but I think there’s plenty of US treasuries floating around to accomodate the pay back. (I could be well wrong with that as I’m shooting from the hip, it’s a Friday :))
The article I read yesterday was specifically to do with Christchurch. At present they are not, but are calling on the government to do something about it.
The reality is from a resource standpoint the government doing it once makes more sense than the 66 NZ councils each doing their own version, only for it to be critiqued, criticised, compared, committeed, chopped and changed with the end result being them all pretty much having the same policies anyway......but then again nothing surprises me these days.
Blanket identification of properties, blanket verification of properties, blanket charging of properties. I think its a central government job.
The Yawn and the Rubble would be not my take nor exchange. I am gonna buy a new mattress...stuff em.
Tis bad enuff when you cannot sit tight with what we have got already.
Tis bad enuff when you can talk up any funny munny to inflate prices perpetually.
What is wrong with a stable currency, no interest, no swapsies, no swings and roundabouts,
Now that the horse is bolted, we should have one real currency, one sure thing, one breath of fresh air, not a puff up and a push down. of all commodities. Shorting and going long.....out of the question...this Friday.
Or is it just me.....I put all my eggs in one basket...Food.... All else is crap mostly. (And so is that in the end).
We have ruined all sensible options. One cannot trust a single thing.
Print and be damned is and was counterfeiting and counter productive. Except when you bet the house on it.
Yeah Right.?!!!!
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