US C/A deficit drops, US housing starts wobble; BoJ sits pat; trade war lull between battles; EU car sales jump; global poverty drops; UST 10yr at 3.08%; oil and gold up; NZ$1 = 66.2 USc; TWI-5 = 69.8

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Here’s our summary of key events overnight that affect New Zealand, with news New Zealand’s currency is rising on improved global risk appetite for emerging market exposures.

But first, the US reported a smaller current account deficit in the June quarter of -2.0% of GDP, down from -2.4% of GDP in the March quarter, which is the level it was in 2017. (Yesterday, New Zealand reported a wider current account deficit of -3.3% of GDP.)

American housing starts grew only marginally in August from July, boosted by an outsize jump in apartment building that covered weakness in starts for single- and multifamily housing. The weakness is more when you realise new building permit data is -5.5% lower than for the same month a year ago.

The latest review of its monetary policy and interest rate settings by the Bank of Japan brought no changes. But they did say they are worried about the trade war fallout.

On the China:US trade war front, not much happened overnight, but it is worth noting that the Shanghai stock exchange rose more than +1% yesterday – and most other major Asian equity markets made similar gains. Markets are turning bullish on the prospects for emerging markets. And China is adjusting to a long-term war of attrition with the US.

There is no progress to report on the NAFTA negotiations between the US and Canada. Both sides are expressing frustration, however, over the other’s intransigence.

In Europe, new car sales grew very strongly in August, up more than +30% compared with the same month a year ago. True, it is usually the year’s smallest month but that growth is exceptional. And it comes on top of July year-on-year growth of more than +10%, and June growth of more than +5%. 2018 car sales are shaping up to be very strong indeed.

In the UK, inflation hit an unexpected six-month high of +2.7%. And London house price growth has gone into reverse.

The World Bank reports that the global population living in extreme poverty has fallen below 750 mln for the first time since the World Bank began collecting global statistics in 1990, a decline in extreme poverty of more than 1 bln people in the past 25 years.

Locally, all eyes will be on our Q2 2018 GDP result. Expectations are low, with growth expected at the +2.5% level and that may be the weakest result in four years.

The UST 10yr is up today at now just on 3.08% and a new three month high. Their 2-10 curve is wider at +27 bps. The Aussie Govt 10yr is at 2.71% (up +5 bps), the China Govt 10yr is at 3.69% and up +2 bps, while the NZ Govt 10 yr is at 2.67%, up +4 bps.

Gold is up +US$6 today at US$1,203/oz in New York.

US oil prices are up sharply today and now over US$71/bbl. The Brent benchmark is now over US$79/bbl. American stocks of crude oil are diminishing.

The Kiwi dollar is starting today up the thick end of +½c at 66.2 USc. On the cross rates we are marginally softer at 91.1 AUc, but firmer at 56.7 euro cents. That puts the TWI-5 at 69.8.

Bitcoin is little changed at US$6,297. This price is tracked in the currency charts below.

This chart is animated here. For previous users, the animation process has been updated and works better now.

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

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End of day UTC
Source: CoinDesk

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