US trade softer, jobs strong; IMF positive; China markets fall again; Eurozone on edge; more HSBC trouble; TPPA deal near; UST 10yr yield drops, gold sinks; NZ$1 = 66.5 US¢, TWI-5 = 71.1

Here’s my summary of the key issues overnight that affect New Zealand, with news the troubles with the Chinese economy are not going away.

But first, the US trade deficit widened slightly in May, led by a drop in exports that could raise concerns over weak overseas demand and a strong American dollar.

However the IMF has issued a positive report about the world’s largest economy, saying ‘growth is bouncing back’. Still, they have wondered about the wisdom of a rate hike in 2015 given the uncertain international situation.

The latest jobs data in America is maintaining its positive trend.

Across the Pacific, the Chinese stock market fell again overnight, taking little notice of the range of support measures put in place by the Chinese government over the past few days. Not helping was that it was widely noticed that the Chinese Premier didn’t bother to mention the market chaos in a statement on the economy.

In Europe, Greece has launched a desperate bid to win fresh aid from sceptical creditors at an emergency euro zone summit overnight, before the country’s banks run out of money. But the response is not good. The creditors said ‘no new proposals have been received’ despite their plea for ‘fast credible proposals’. And, just a day after it tightened the basis for Greek banks accessing more cash, the ECB warned overnight (p34) that “moral hazard” could be another reason to limit any more emergency liquidity assistance for those beleaguered institutions.

In England, HSBC has fired six staff who filmed themselves staging a mock ISIS-style beheading of a colleague and posted the video online all as part of a ‘team building exercise’, it said overnight.

Back in our region, the final push is on to wrap up the Trans Pacific Partnership trade negotiations with expectations now that it will all be finalised by the end of the month.

In New York the UST 10yr yield benchmark is falling faster now and is down to 2.20%. That is about -10 bps lower than this time yesterday. Local swap rates marked time yesterday but will undoubtedly react to this morning’s drop.

US oil markets are also down but less aggressively than yesterday. The US benchmark price now just above US$52/barrel, and Brent crude is at US$57/barrel.

The gold price is sharply lower at US$1,153/oz. That is almost a $20 fall and takes the price back to levels last seen briefly in March, but really back to 2010 levels.

The Kiwi dollar opens today down against the US dollar at 66.5 US¢, up against the Aussie dollar at 89.5 AU¢, and at 60.7 euro cents. The TWI-5 is at 71.1, and still a three year low.

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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