The EU and Greece agree deal, but tough details linger; China trade and markets improve; US expectations improve; UST 10yr yield 2.42%; NZ$1 = 66.9 US¢, TWI-5 = 71.6

Here’s my summary of the key issues over night that affect New Zealand, with news there is a ‘deal’ for Greece.

However, all signs are that the Greek government has caved in at the last minute. Although expected, it will not be easy getting this deal approved by their parliament. The EU got all it thought it needed. But some observers say it will be a disaster for Greece. It’s a win for ‘austerity’ and the cost of being untrustworthy when negotiating. Ministers in their government are already resigning and to get the deal approved the Greek government will likely need the support of opposition, pro-Europe parties. There remain ugly details to resolved so don’t be surprised if things come unstitched in the future.

In China, their share market is leading Asia higher, as Beijing’s efforts to reverse a massive selloff appeared to be holding up, though trading for hundreds of stocks remains halted.

In fact, China’s export and import data were better than expected in June, showing some signs of recovery in the world’s second largest economy.

In the US, a Fed survey found that Americans expected higher earnings and home-price growth last month, and also found little change in inflation expectations.

The US Federal government budget surplus came in slightly more than expected in June, setting up a smaller deficit in the current financial year than last year, one now expected to be about -2.5% of US GDP.

So with Greece turned down from boil to simmer and China stabilised, the US Fed is probably now set for a September rate hike.

On Wall Street, the UST 10yr yield benchmark has risen following confirmation of the market’s bet that Greece would be resolved; it is currently up to 2.42%.

Oil markets are however holding their lower levels. The US benchmark price is now just above US$52/barrel, and Brent crude is just above US$58/barrel. We are still waiting for a US-Iran deal and that could drive down oil prices further.

The gold price is down, now at US$1,157/oz as risk fades away.

The main beneficiary of all this stabilisation is the US dollar. We are virtually unchanged against all other pairs. We start today lower at 66.9 US¢, unchanged at 90.4 AU¢, and marginally higher at 60.8 euro cents. The TWI-5 is still at 71.6.

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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