US house sales strong, jobless claims low; ECB signals more stimulus; AU mortgage rates rising; China considers Tobin Tax; UST 10yr yield 2.04%; NZ$1 = 67.8 US¢, TWI-5 = 72.5

Here’s my summary of the key events overnight affect New Zealand, with news the New Zealand dollar is strengthening again.

But first, in the US, home resales recovered strongly in September and new claims for unemployment benefits stayed at 42-year lows last week, pointing at solid domestic growth even with question marks about the global economy.

Wall Street rallied to nine-week highs and were poised for their best month in four years on stronger-than-expected corporate results and signals from the ECB about extending its stimulus program.

Mario Draghi said this morning that more stimulus may come from the ECB before the end of the year.

But more than equities are gaining on the ECB signals; the Kiwi dollar is leading commodity currencies higher and this morning has gained +6.5% against the Aussie in six weeks, +8% against the greenback in just over a month, and more than +9% against the euro since in the past six weeks. Commodity currencies seem back in favour.

Bill English assessed the relative positions of the Australian and New Zealand economies in Sydney overnight, a review which led some papers over there.

Another reason we are gaining against the Aussie dollar is that a second bank there – the CBA – has followed Westpac and raised interest rates for borrowers despite no shift in official rates. They are making borrowers pay for the move by regulators to get them to improve their capital strength, something they should never have let weaken in the first place.

And China is getting seriously concerned about the leakage of money out of their economy. For the second time in the past few weeks they have officially signaled they are considering a Tobin Tax to try and stop the drain. Seems odd to me that they would publicly suggest this option; that could speed the outflow even more as people move to get funds out before the tax arrives.

In New York, the UST 10yr yield benchmark slipped for a second day and is currently at 2.04%.

The US benchmark oil price is holding at just over US$45/barrel, with the Brent benchmark just on US$48/barrel.

The gold price is also unchanged at US$1,167/oz.

The New Zealand dollar starts today stronger. It is currently at 67.8 US¢, at 94.1 AU¢, and 60.9 euro cents. The TWI-5 is now up to 72.5.

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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