Low China CPI inflation; producer price deflation, similar in US; American wholesale trade brightens; oil and gold up marginally; UST 10yr yield 2.35%; NZ$1 = 65.3 US¢, TWI-5 = 71.3

Here’s my summary of the key events overnight that affect New Zealand, with news firstly from China.

Consumer inflation there took a sharper-than-expected shift lower in October at +1.3%. Markets were expecting +1.6%. Worse, China’s producer price deflation is now running at -5.9%, a level it has maintained for the past three months and can’t seem to shake. Everything hangs on the resilience of China’s large service sector. Chinese retail sales data is due out later today for October. But with CPI falling, expect some significant stimulus soon.

Similarly, in the US where cheap oil, a strong currency and slower growth overseas are all keeping import and export prices low, even negative.

But American wholesale trade data came in better than markets were expecting. They were expecting another small dip in sales following a rather large dip in August. What they got was a reassuring rise in sales along with an unexpected rise in inventory levels. Firms are building for stronger future demand, it seems.

In New York, the UST 10yr yield benchmark consolidated its recent gains today, slipping marginally to 2.35%. Equity prices are lower across the board.

The US benchmark oil price inched higher today, now just under US$45/barrel, and the Brent benchmark is at US$48/barrel. The International Energy Agency noted very large reductions in investment in the sector overnight but this has not affected market pricing much at all given the broader picture of oversupply.

The gold price gained a few dollars and is now at US$1,091/oz. But that may be about to change as a huge new gold field has been discovered off the coast of China.

The New Zealand dollar starts today marginally higher at 65.3 US¢, at 92.9 AU¢, and at 61.1 euro cents. The TWI-5 is at 71.3.

Don’t forget to check back at 9am for full coverage of the Reserve Bank’s financial stability review.

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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