AUD/USD in 20pip range around $0.9130 ahead of the national elections

Asian Market Update: Firmer Yen caps the rally on the Nikkei225 amid rumors of failed Tokyo Olympics bid

Observations/Insights

- Nikkei225 underperforms as JPY strengthens below ¥100 against USD amid speculation of IOC awarding 2020 Olympics to Madrid rather than front-runner Tokyo.

- Midsession risk aversion also boosting JPY after reports of intercepted Iran intelligence that US interests in Iraq would be targeted if Syria is attacked.

- 10-yr Treasury yield rises above 3.0% in electronic trade - 2-year high - as markets await non-farm payrolls.

- Hyundai Motor rallies on reports of a deal with unions on wages.

Economic Data

- (AU) AUSTRALIA AUG AIG PERFORMANCE OF CONSTRUCTION INDEX: 43.7 V 44.1 PRIOR

- (JP) JAPAN AUG OFFICIAL RESERVE ASSETS: $1.25T V $1.25T PRIOR (rises for 2nd consecutive month)

- (MY) MALAYSIA JULY TRADE BALANCE (MYR): 2.9B V 3.9BE

- (US) Weekly Fed Balance Sheet Assets Week ending Sept 4th: $3.610T (record high) v $3.602T prior

Fixed Income/Commodities/Currencies

- Daily trade in FX markets avg $5.3T in Apr 2013 v $4.0T in 2010 - Bank for International Settlements(BIS) report

- (CN) China MoF sold 6 month bills at 3.8726% v 3.9103% on Aug 15th

- (JP) BoJ to buy ¥150B in corporate bonds on Sept 12th

- (AU) Australia MoF (AOFM) sells 5.75% A$800M in 2021 Bonds; avg yield: 3.9592%; bid-to-cover: 2.50x

- SLV: iShares Silver Trust ETF daily holdings fall to 10,534 tonnes from 10,537 tonnes

- USD/INR: INR currency (Rupee) slightly higher in early trade around INR65.90

- USD/JPY falls 50pips below 99.70; EUR/JPY and AUD/JPY also down respectively 50 and 40 pips to ¥130.90 and ¥91.05 lows.

- AUD/USD in 20pip range around $0.9130 ahead of the national elections; EUR/USD also in 20pip range around $1.3120 with all eyes on the payrolls data.

Speakers/Political/In the Papers

- (CN) China Banking Regulatory Commission (CBRC): Increasingly more tolerant of bad loans among China's small and micro companies - press

- (CN) Seven cities were called to meet the Department of Housing regulators due to soaring housing prices - press

- (CN) China President Xi: To deepen interest rate and exchange rate reform; further increase Yuan flexibility - Chinese press

- (CN) PBoC Governor Zhou: China has ample measures for QE exit - press

- (JP) Japan Chief Cabinet Sec Suga: Japan PM Abe spoke to China President Xi at G20 for first time

- (JP) South Korea bans imports on all fishery products from 8 Japan prefectures including Fukushima - press

- (KR) According to BoK data, at the end of Aug, foreign exchange bank deposits hit a record $41B v $36.5B prior - financial press

- (US) At least three Senate Banking Panel Democrats are expected to oppose to Larry Summers ' nomination as next Fed Chairman - financial press

Equities

Markets Snapshot (as of 03:30 GMT):

- Nikkei225 -1.1%, S&P/ASX -0.3%, Kospi +0.4%, Shanghai Composite +0.4%, Hang Seng +0.2%, Sept S&P500 -0.1% at 1,651, Dec gold -0.1% at $1,372, Oct crude oil flat at $108.39/brl

US markets:

- GPS: Reports Aug SSS 2.0% v 2.3%e; -0.3% afterhours

- F: CEO Mulally may step down earlier than planned

- AAPL: Said to be considering future iPhone models with screens as large as 6 inches; +0.4% afterhours

- TKR: Plans to separate its businesses into two independent publicly traded companies; To take charge of $125M; +5.7% afterhours

- SWHC: Reports Q1 $0.40 v $0.36e, R$171M v $165Me; Guides Q2 $ (gaap) $0.20-0.22 v $0.30e, Rev $135-140M v $143Me; -5.2% afterhours

- PAY: Reports Q3 $0.24 v $0.20e, R$418M v $406Me; +5.3% afterhours

Notable movers by sector:

- Industrials: Hyundai Motor Co 005380.KR +2.5% (tentative wage deal; vote set for Monday); Hitachi Construction Machinery 6305.JP -0.9%, Komatsu Ltd 6301.JP -1.1%, Taisei Corp 1801.JP -4.5%, weakness in Japan equities, particularly retail and construction, attributed to speculation Tokyo Olympic bid failed on Fukushima concerns

- Technology: Sony Corp 6758.JP +0.4% (to release second smartwatch in China), Hynix Semiconductor 000660.KR -2.0% (continued China plant closure), High Tech Computer Corp 2498.TW +0.8% (confirms Saffron sale plans), MediaTek Inc 2454.TW +0.7% (Aug results), Acer Inc 2353.TW -0.3% (speculation on Q3 loss)

- Telecom: NTT DoCoMo Inc 9437.JP +0.6% (speculation on iPhone sales), China Mobile 941.HK +1.2% (in talks with Apple on carriage agreement)

- Energy: Green Energy Technology Inc 3519.TW +1.4% (Aug results)

- Materials: Nippon Steel & Sumitomo Metal Corp 5401.JP +1.9% (to raise production capacity)