US Q2 growth surprises; Q3 indicators positive; But less drive for Sept rate hike; China blames US for share rout; UST 10yr yield 2.19%; oil higher, gold lower; NZ$1 = 64.7 US¢, TWI-5 = 69.1

Here’s my summary of the key events overnight that affect New Zealand, with news the relief rally seems to be gaining momentum on the back of some pretty solid data.

The American economy grew faster than initially thought in the second quarter, revised higher to +3.7% mainly on good domestic demand. This is one economy showing fairly strong momentum that could still allow the US Fed to hike interest rates this year.

However, the current quarter has seen the recent turbulent markets. And car sales in August look like they may come in less than expected. Still, July house sales were better than expected and the latest week of jobless claims were also better than expected. A mixed but generally positive picture for the world’s largest economy.

A Fed member suggested overnight that the expected rate hike might not come next month. And a Chinese official said fear of that US rate hike was what caused the Shanghai stock market stampede, not anything to do with China’s economy.

And the turbulence seems to be over for the time being. Chinese markets rose following their local rate cut, and American markets are higher as well.

As the calm returns, so does the fundamental pricing.

In New York, the UST 10yr yield benchmark is back to 2.19%.

The US oil price is also sharply higher, back over US$42 a barrel. Brent crude is back up at US$47 a barrel. Even the dairy futures prices have risen.

Gold has fallen further, to US$1,119/oz.

The New Zealand dollar has firmed to 64.7 US¢ as risk aversion fades. It is now at 90.2 AU¢, and 57.5 euro cents. The TWI-5 is up to 69.1.

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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