Deutsche Bank to cut 35,000 staff; FTA talks with EU to begin; China ditches one-child policy; US GDP growth slows; UST 10yr yield 2.16%; oil up, gold down; NZ$1 = 66.9 US¢, TWI-5 = 72.2

Here’s my summary of the key events overnight that affect New Zealand, with news a free trade agreement between New Zealand and the European Union is officially on the cards. 

Prime Minister John Key and European Union leaders have agreed to start discussions on an agreement “as soon as possible”. Key says the EU is a key trading partner for New Zealand, with two-way trade totalling over $19 billion. The EU is also our second-largest investment source and largest research and development partner. Key’s commitment to the EU comes further to the Government this year signing a FTA with Korea and concluding Trans-Pacific Partnership negotiations.  

Deutsche Bank is cutting nearly a third of its staff and closing its operations in New Zealand. Germany’s biggest lender has announced it’ll slash 35,000 jobs, shut operations in 10 countries, close 200 branches in Germany and halve the number of its investment banking customers by 2020. The overhaul, aimed at simplifying Deutsche Bank and improving its returns, comes as it reported a 6 billion euro loss in the third quarter. 

China’s ditching its one-child policy as it tries to alleviate demographic strains on the economy and spur growth. The Communist Party eased restrictions in 2013 to allow people who met certain conditions to have two children. After decades of restrictions, it’ll now allow all couples to have two children. China’s working age population fell for the first time in 2012, with around one in three Chinese people expected to be over the age of 60 in 35 years’ time. 

Economic growth in the US braked sharply in the third quarter, as businesses cut back on restocking warehouses to work off an inventory glut. Gross domestic product (GDP) increased at an annual rate of 1.5%, after expanding at 3.9% in the second quarter. Economists say the inventory drag is likely to be temporary, and expect growth to pick back up in the fourth quarter. Keeping interest rates on hold, the Fed yesterday described the economy as growing at a “moderate” pace and hinted at a December hike.

In New York, the UST 10yr yield benchmark is up today to 2.16%.

The US benchmark oil price is up slightly to US$46/barrel, while the Brent benchmark is at US$49/barrel.

The gold price has fallen back, after hiking earlier this week, to US$1,146/oz.

The New Zealand dollar has made major gains against the Australian, following the price of iron ore dropping below US$50 a tonne for the first time since July. The dollar’s the strongest it’s been in six months, at 94.5 AU¢. The New Zealand dollar’s also strengthened to 66.9 US¢, following the announcement of weak GDP growth in the States. It’s at 61.0 euro cents. The TWI is up to 72.2.

If you want to catch up with all the local changes yesterday, we have an update here.

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

Daily exchange rates

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// to generate the format for date representation in x axis

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var timestamday = 86400000;
var timestammonth30 = 2592000000;
var timestammonth31 = 2678400000;
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var mm2 = time4.getMonth();
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for(i=0;i

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