US inflation rises; jobless claims fall; China's bitcoin clamp shakes price; China data weakens; BofE signals rate hike; Australian hiring strong; UST 10yr yield at 2.20%; oil unchanged, gold down; NZ$1 = 72.2 US¢, TWI-5 = 74.2

Here’s my summary of the key events overnight that affect New Zealand, with news that August data out of China indicates slowing growth there.

Firstly however, American consumer prices rose faster, up +1.9% year-on-year in August, from a jump in the cost of petrol and rents, signs of firming inflation which is at a seven month high and which has boosted the probability of an interest rate increase from the Federal Reserve in December. However, that rise ate into wage gains. Meanwhile, the number of jobless claims fell after the previous two week jumps following major weather disruption in parts of some southern states.

In China, bitcoin exchange BTCChina said it would stop all trading at the end of this month, setting off a further slide in the value of the cryptocurrency that left it over -30% down from the record highs it hit earlier in the month.

And foreign direct investment into the Chinese rose +9.1% year on year to US$9.6 bln in August, according to data released overnight from their Ministry of Commerce. The is a big turnaround from earlier outflows and so now they are about all square. In the first eight months, FDI has dropped just -0.2% year on year to US$84.1 bln.

But there are some worrying signs that the usual areas of growth are slowing in China. Cement production is down sharply in China, down -3.7% in August from the same month a year ago. Meanwhile, retail sales rose +10.1% year on year, but that was the slowest gain this year. And industrial production rose +6.0%, extending a sharp 2017 slowing in growth. Tellingly, electricity production grew only +4.8% in August year on year, its slowest growth in a long time.

Oddly, a big real estate listing platform, Juwai.com, is apparently claiming that Chinese authorities are about to loosen their capital control rules to permit easier funding of overseas real estate by Chinese citizens. They may have inside information but there is no official confirmation of this. And the flow to New Zealand is unlikely to be large as market gains in China are still substantially positive whereas ours have evaporated. It is hard to see why Chinese investors would forsake those for our declines.

The OECD is reporting that G20 growth is rising, up to +3.6% pa in the second quarter of 2017.

In the UK, the Bank of England signaled it is preparing to raise interest rates within months to restrain accelerating inflation.

In Australia, employers have taken on an additional 325,000 staff in the past year, most of them full time workers, in the strongest burst of hiring since 2000.

In New York, the UST 10yr yield is still rising and is now at 2.20%.

The price of crude oil has risen just slightly today and is now just over US$49.50 a barrel, while the Brent benchmark is just over US$55.

The price of gold is down -US$4 at US$1,324/oz.

And the Kiwi dollar has also slipped, now just on 72.2 US. On the cross rates we are at 90.3 AU¢ however, and 60.5 euro cents. And the TWI-5 index is now at 74.2.

If you want to catch up with all the changes on yesterday we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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