Non-farm payrolls better than expected; McClay receives assurance NZ is on track with EU FTA, Key congratulates Turnbull, inflation weakens in China; UST 10yr yield at 1.36%; oil and gold stable; NZ$1 = 72.9 US¢, TWI-5 = 76.5

Here’s my summary of the key events over the weekend that affect New Zealand, with news the US’s labour market performed much better than expected last month.

The Bureau of Labor Statistics’ non-farm payrolls report shows 287,000 new jobs were added over the month, a powerful rebound from only 11,000 in May, and the largest increase in eight months. However the unemployment rate crept up to 4.9%, retracting most of its sharp decline from April. Average hourly earnings rose less than expected at 2.6% over the year. A BNZ strategist says June’s non-farm payrolls is a “goldilocks report”, strong enough to suggest that the economy isn’t falling into a hole but weak enough to suggest that the Fed won’t be tightening anytime soon.

Trade Minister Todd McClay has received strong assurances our trade interests won’t take too much of a hit from the Brexit. Having met the European Union’s trade commissioner and other trade ministers at a G20 summit in Shanghai over the weekend, McClay is adamant our trade relationships with the EU and UK will continue and we’ll keep being kept in the loop with any discussions between the EU and UK that affect us. He’s also been  reassured New Zealand remains on track to negotiate a free trade agreement with the EU.

Prime Minister John Key has congratulated Malcolm Turnbull on forming an Australian government. Turnbull last night declared victory, eight days after cliffhanger elections, leaving his conservatives with a fragile grip on power. Key says he’s been in regular contact with Turnbull and believes New Zealand and Australia “should work even more closely together”.

New data shows consumer inflation in China decelerated in June as food prices increased at a slower pace. China’s Consumer Price Index (CPI) rose 1.9% in June from a year earlier, down from May’s 2.0% increase. China’s Producer Price Index (PPI) declined 2.6% year-on-year – once again a little weaker than expected. The index has lingered in deflationary territory for more than four years, although it’s decelerated less rapidly in recent months. Soft inflation, stemming from weak demand, gives China’s central bank scope to keep easing monetary policy. 

The UST 10yr yield has slumped back down to 1.36%. 

The US oil price has remained stable since Friday morning, at US$45/barrel. The Brent benchmark is just below US$47/barrel.

The gold price has remained at US$1,357/oz.

The NZ dollar starts the day strong at 72.9 US¢, 96.4 AU¢ and 66.0 euro cents. The TWI-5 index has lept ahead even further since Friday to 76.5.

If you want to catch up with all the local changes from Friday, 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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