PBOC pledges yuan won't devalue more, AUS housing market expected to cool, US retail sales up, oil prices plummet; UST 10yr yield 2.16%; oil below US$42/barrel; NZ$1 = 65.7 US¢, TWI-5 = 70.2

Here’s my summary of the key events overnight that affect New Zealand, with news the US oil price has hit a 6-year low.

But first, the People’s Bank of China is trying to restore calm to jittery global markets, as the yuan slides for the third day straight. The Bank sparked fears of a currency war, dragging other Asian currencies to multi-year lows, after it devalued the yuan on Wednesday.

It’s now come out saying it doesn’t expect the currency to further depreciate, as China’s robust economy is providing “strong support” for the exchange rate. Yet the reality is weak economic data, and expectations of more interest rate cuts later in the year, are fueling speculation authorities could let the currency weaken even more.

Across the Ditch, one of their largest home builders has warned the Australian residential property market is slowing, with double-digit price growth coming to an end. After reporting a 36% profit increase for the year, Mirvac says Sydney’s rampant growth is tailing off.

It says previous cycles suggest the volume of sales should moderate by about 15% over the next year or two, despite supply remaining an issue. Mirvac’s call comes just as the Real Estate Institute of New Zealand announced Auckland house prices took a breather in July.

Data out of the US shows retail sales rebounded in July, as households bought more cars among other goods. Retail sales rose 0.6% in July, broadly in line with economists’ expectations. Figures for May and June have been revised up, indicating buoyancy in the economy that points to a Federal Reserve interest rate hike next month.

The US oil price has hit a six-year low, falling below US$42/barrel to March 2009 levels. Brent crude has sunk to just under US$49/barrel. US stockpiles remain at their highest levels for this time of year in at least 80 years. OPEC reports it also pumped the most oil in three years during July.

Moody’s ratings agency expects prices to remain at historical lows until 2018. It believes prices will average at around US$50/barrel this year and rise to only $60/barrel next year.

The gold price has dropped US$9 today, to US$1,114/oz.

In New York, the UST 10yr yield benchmark has increased, but remains low at 2.16%.

The New Zealand dollar has weaken compared to this time yesterday. It’s dropped to 65.7 US¢, 89.3 AU¢, and 59.0 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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for(i=0;i

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