Indonesia open to reviving relationship with NZ beef exporters; ECB says there are too many banks; High prices hamper US home sales; US labour market strengthens 'somewhat further'; UST 10yr yield at 1.61%; oil and gold up; NZ$1 = 73.0 US¢, TWI-5 = 76.1

Here’s my summary of the key events overnight, with news New Zealand’s Trade Minister is “cautiously optimistic” there’s an opportunity for our beef exporters to revive their relationship with Indonesia.

Having met with his counter-part in Jakarta, Todd McClay says Indonesians are demanding more beef than they’re supplying locally. The regulations, which had seen New Zealand’s beef exports to Indonesia drop by 80%, have also been changed. Indonesia had once been New Zealand’s second largest beef export market. 

The president of the European Central Bank has gone head-to-head with commercial banks. Mario Draghi says their profits are being hampered as there are too many of them, not because of the central bank’s negative interest rate policy. He says the banking sector had “outgrown capital markets” and overcapacity is what’s squeezing their margins.

The number of Americans filling for unemployment benefits unexpectedly fell last week to a two-month low. The moving four-week average was also down, supporting the Federal Reserve’s case for a rate hike by the end of the year. Keeping rates on hold yesterday, the central bank said it expected the labour market to strengthen “somewhat further”.

High prices and a shortage of supply are locking Americans out of the housing market. New (seasonally adjusted) data shows house prices were up 0.5% in July, while existing home sales were down 0.9% in August.

The National Association of Realtors says the US’s healthy labour market isn’t creating the activity you’d expect it to. Having peaked in June, sales have inched back as supply isn’t picking up to tame price growth and replace what’s being sold quickly. 

In New York the UST 10yr yield has dropped right back to 1.61%.

The US benchmark oil price has continued to climb overnight to US$46 a barrel. The Brent benchmark is just below US$48 a barrel. 

The gold price is also up to US$1,338/oz.

The New Zealand dollar has under-performed overnight, despite the US dollar having a generally weaker session. It’s dropped to 73.0 US¢, 95.6 AU¢ and 65.2 euro cents. The TWI index has fallen to 76.1.

ANZ economists say it is global drivers that will hold sway, and while the NZD may have some further downside prodding over the coming weeks, the dips will be shallow.

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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for(i=0;i

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