IMF adds yuan to SDR basket; Fed bows to Congress; US house sales underwhelms, retail impresses; Japan makes appeal; UST 10yr yield 2.22%; oil unchanged, gold rises; NZ$1 = 65.8 US¢, TWI-5 = 71.6

Here’s my summary of the key events overnight that affect New Zealand, with news of global money system rule changes.

Firstly, the IMF has announced that China’s currency, the yuan, will join the Fund’s basket of reserve currencies. It will have an 11% weighting starting in 2016. This is important news because it heralds some major fund buying to rebalance portfolios, and it downgrades the weightings of the euro and the UK pound especially reducing the combination from 49% to 39% to accommodate the yuan, with a smaller reduction for the yen. The US dollar’s position is unaffected. So not everyone thinks it is a good or justified move however.

And the US Fed adopted a new rule today restricting its ability to lend money to financial institutions in a crisis. It is a direct effort to ease concerns in Congress about the central bank’s free power to pump money into the financial system.

Meanwhile, American house sales, the ones for previously owned homes, rose far less than expected in October, the latest sign that their housing market is losing momentum after strong start to the year. This sector is losing out to the newly built sector which is still showing strong gains. Americans are buying ‘new’ rather than ‘used’.

And a fall in two regional purchasing manager surveys won’t help sentiment either.

But retail has started the holiday season stronger than many feared. US holiday shopping is on track for a modest +4% rise this year after strong turnout during the Thanksgiving and Black Friday weekend and thanks to strong online sales, according to the National Retail Federation.

We are heading to two sharply contrasting policy decisions this month, reflecting how the world’s two largest economies have moved from the Great Recession to the Great Divide. The US seems to be going from strength-to-strength while Europe (and Japan) are struggling to lift from their separate funks. Japan today urged it large companies help it lift the deflation weight that has hung over it for decades.

And China is adopting electricity market reforms that are starting to sound very much like New Zealand’s.

In New York, the UST 10yr yield benchmark is unchanged at 2.22%.

The US benchmark oil price is also unchanged at US$42/barrel, while the Brent benchmark is at US$45/barrel.

But the gold price has had a small bounce after its weekend fall, now at US$1,063/oz.

The New Zealand dollar starts today at 65.8 US¢, at 90.9 AU¢, and at 62.3 euro cents. The TWI-5 is at 71.6 and its highest level in a month.

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 ». And don’t forget to vote in the Flag Referendum

Daily exchange rates

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var chart_subtitles_arr= ["Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate"];
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// to generate the format for date representation in x axis

var timestamweek = 604800000;
var timestamday = 86400000;
var timestammonth30 = 2592000000;
var timestammonth31 = 2678400000;
var timestamyear = 31536000000;
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var mm2 = time4.getMonth();
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for(i=0;i

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