Jitters ahead of Fonterra's milk price forecast and US jobs report, oil price woes, PBOC helps stock market, Bank of England surprises markets; UST 10yr yield 2.23%; NZ$1 = 65.5 US¢, TWI-5 = 70.2

Here’s my summary of the key events overnight that affect New Zealand, with news oil prices have hit a four-month low.

But first, there’s nervousness ahead of an expected revised Fonterra forecast milk price for the season, expected this afternoon. Fonterra has previously forecast a price of $5.25 per kilo of milk solids for its farmers. However the dire GlobalDairyTrade auction earlier this week suggests a revised forecast could be under $4. ANZ is now picking a price in the “mid-$3” range. 

Fonterra’s announcement could see the New Zealand dollar slump back to yesterday’s six-year low against the US dollar. However we could see this reverse if the US’s non-farm payrolls report due out overnight is worse than expected. Data released by ADP yesterday shows it might be.  

In other news, the People’s Bank of China says it’ll provide “ample liquidity” to help the country’s plunging stock market. It made the announcement minutes after the Shanghai Composite Index fell as much as 8.2% at its open yesterday. It says it’ll help the China Securities Finance Company get liquidity through loans and bonds, and do whatever it can to prevent systematic risks.

The Bank of England has surprised markets, signalling it’ll delay a keenly anticipated interest rate rise until next year, despite a strengthening economy. The move’s put the Bank on a more cautious path than the US Federal Reserve, which is expected to raise rates this year. Yet it remains ahead of the European Central Bank, which is still in easing mode.

US oil prices have hit a four-month low. Crude has sunk to US$44/barrel, while Brent crude has dropped to US$49/barrel. Oil moved into a bear market last month, on signs the global surplus would continue. The US is pumping at nearly its fastest rate in 30 years, while the largest OPEC members are producing record volumes. 

The gold price remains low, but has gained a few dollars today, reaching US$1,090/oz.In New York, the UST 10yr yield benchmark has slipped to 2.23%.

The New Zealand dollar has strengthened half a cent to 65.5 US¢, after hitting a six-year low yesterday. It’s up to 89.2 AU¢, and remains at 60 euro cents. The TWI-5 is at 70.2.

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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