The greenback weakens on policy chaos

Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news incoherent trade policies have driven the US dollar to its lowest level since 2022 as markets don't see any easing of geopolitical risks driven out of Washington. The US said it will set unilateral tariff rates on most trading partners at the end of the month.

Meanwhile, US initial jobless claims came in at 245,000 last week, little-changed from the prior week. This embeds the recent higher level and extends the 2025 rising trend. We haven't seen two consecutive high-claims weeks since mid 2023. There are now 1.8 mln people on these benefits, +7.1 more than year-ago levels.

The immigration crackdown on undocumented farm and hospitality workers is having ripple impacts on corporate America, with some major brands reporting stuttering sales.

And the Congressional Budget Office has set out how the Trump Budget Bill will hurt middle and poor Americans, and enrich wealthy ones. It is a report sure to annoy the President.

And he is already annoyed by the Fed not cutting interest rates.

Separately, as analysts expected, US producer prices came in +2.6% higher in May than a year ago.

The UST 30yr bond auction today saw a -7.5% fall in investor demand, mirroring the -10% drop in support we noted yesterday in the UST 10yr auction. The median yield came in at 4.80%, up from the 4.75% at the prior equivalent event a month ago.

Elsewhere, India’s CPI inflation fell to 2.8% in May from 3.2% in April and dipping below analyst expectations of 3%. This is their lowest reading since February 2019, so a six year low. It is also getting closer to the bottom of their central bank's inflation target range of 2%-6%. Food price rises fell to the lowest level since October 2021, and drove the easing.

In Australia, the Melbourne Institute survey for June shows inflation expectations there rising to 5.0%, the highest level since July 2023 and up sharply from the 4.1% in May.

International container freight rates were unchanged last week from the prior week to now be -26% lower than year-ago levels. A year ago rates were in a strong rising trend which lasted until July, then they eased steadily until May 2025. Bulk freight rates rose +6.8% last week from the week before to their highest level since early November. They are now -5.2% lower than year ago levels.

The UST 10yr yield is now at 4.36%, and down -6 bps from this time yesterday.

The price of gold will start today at US$3,383/oz, and up +US$60 from yesterday.

American oil prices are up another +US$1.50 at just over US$68.50/bbl while the international Brent price is now just over US$69.50/bbl.

The Kiwi dollar is now just over 60.6 USc, up +20 bps from yesterday. Against the Aussie we are also up +20 bps at 92.9 AUc. Against the euro we are down -20 bps at 52.4 euro cents. That all means our TWI-5 starts today at under 68.3 and essentially unchanged from yesterday.

The bitcoin price starts today at US$108,419 and down -0.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.1%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again on Monday.