US inflation rises, confidence slips; Greek banks to reopen; China buys risk; ANZ warns on low rates again; oil and gold prices fall; NZ$1 = 65.1 US¢, TWI-5 = 70.1

Here’s my summary of the key issues over the weekend that affect New Zealand, with news it will be a big week in New Zealand with all eyes on the Reserve Bank and their OCR decision on Thursday. Markets think a cut is almost certain. The question is, how big?

But first, American consumer prices rose for a fifth straight month in June as the cost of petrol and a range of key services increased. These signs of firming inflation strengthen the case for an interest rate hike this year. But the jump also pushed down ‘real earnings’.

And American consumer confidence slipped in early July. The small loss reflected a rise in concern about international developments but were partially offset by continued news of job gains.

In Greece, their banks will re-open tomorrow (Monday, their time), three weeks after they were shut down to prevent the system collapsing under a flood of withdrawals. The EU support being provided will allow loans to the ECB and IMF to be ‘repaid’. But the mess is not resolved, merely deferred. In fact Greece’s ex-finance minister is pouring scorn on the deal, certain the ‘reforms’ are going to fail. Apart from the surviving politicians, no one thinks this is going to work.

But things in Europe are not all tainted by Greece. Sales of new cars were up +15% in June, continuing a trend that started 22 months ago and this was the largest month-on-month increase since December 2009.

And from the ‘odd’ file; here’s a role some central bank’s play; In Hungary they are buying art, hotels and castles. Apparently, its part of an effort to keep some assets out of the hands of those dastardly foreigners.

In China, the scale of official intervention to ‘save’ their equity markets is now becoming clearer. The country’s biggest state-owned banks supplied more than US$200 bln to help prop up equities. That undermines the view that the ‘recovery’ is sustainable. Just another case where frightened regulators take private market risk on to the public balance sheet.

And in Australia, a paper out there on Friday (locked) shows that ANZ economists think the skyrocketing rise in house prices is more to do with the low interest rate policy of their Reserve Bank than tax concessions or other factors. (That matches some earlier comment by Mike Smith.)

In New York, the UST 10yr yield benchmark fell slightly on Friday to 2.35%.

Oil markets are lower after the US-Iran deal. The US benchmark price is now just above US$51/barrel, and Brent crude is just above US$57/barrel. Rising supply is dousing prices.

The gold price is also down sharply again, now at only US$1,134/oz.

The Kiwi dollar continues to decline. We are start the week at 65.1 US¢, at 88.5 AU¢, and at 60.3 euro cents. The TWI-5 is at 70.1. How much of the expected OCR cut on Thursday is priced in is hard to assess, but it is likely most of it is.

If you want to catch up with all the local changes of 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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var chart_subtitles_arr= ["Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate","Daily benchmark rate"];
var tab_titles_arr= ["US$","AU$","TWI","u00a5en","u00a5uan","u20acuro","GBP"];
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// to generate the format for date representation in x axis

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var timestamday = 86400000;
var timestammonth30 = 2592000000;
var timestammonth31 = 2678400000;
var timestamyear = 31536000000;
var timestamquarterly = 7776000000;

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else if (mm == "Mar")
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do {
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do {
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var dd= fomat.substring(0,k1);
var mm = fomat.substring(k1+1,k2);
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mm= “12”;
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var mm2 = time4.getMonth();
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var ahref_title=”Click here for full story”;
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var yy3 = yy2+””;
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var mm2 = time4.getMonth();

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return 0;
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for(i=0;i

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