AUD spikes on strong Australia jobs data as markets reprice RBA rate cut expectations

Economic Data

- (CN) CHINA MAR FOREIGN DIRECT INVESTMENT (FDI )Y/Y: 2.2% v 0.9% PRIOR

- (AU) AUSTRALIA MAR EMPLOYMENT CHANGE: +37.7K V +15.0KE; UNEMPLOYMENT RATE: 6.1% (3-month low) V 6.3%E; PARTICIPATION RATE 64.8% (8-month high) V 64.6%E

- (AU) AUSTRALIA MAR CONSUMER INFLATION EXPECTATION: 3.4% V 3.2% PRIOR

- (AU) AUSTRALIA MAR NEW MOTOR VEHICLE SALES M/M: 0.5% V 2.9% PRIOR; Y/Y: 4.4% V 4.1% PRIOR

- (NZ) NEW ZEALAND MAR MANUFACTURING PMI: 54.5 V 56.1 PRIOR

- (NZ) NEW ZEALAND MAR ANZ JOB ADVERTISEMENTS M/M: -0.8% V +0.7% PRIOR

- (UK) UK MAR RICS HOUSE PRICE BALANCE: 21% V 15%E (6-month high)

- (US) FEB NET LONG-TERM TIC FLOWS: +$9.8B V -$27.2B PRIOR; TOTAL NET TIC FLOWS: $4.1B V $88.3B PRIOR; Japan overtakes China as largest holder of US debt

Index Snapshot (as of 02:30 GMT)

- Nikkei225 flat, S&P/ASX -0.8%, Kospi +0.4%, Shanghai Composite -0.3%, Hang Seng +0.4%, Jun S&P500 -0.1% at 2,089

Commodities/Fixed Income

- Jun gold +0.3% at $1,205/oz, May crude oil -0.6% at $56.07/brl, May copper +0.7% at $2.73/lb

- (CN) PBoC to inject CNY10B in 7-day reverse repos (15th consecutive injection); Drains net CNY15B this week v drained CNY15B prior (2nd consecutive week of drain)

- USD/CNY: PBoC sets yuan mid point at 6.1305 v 6.1340 prior setting (strongest yuan setting since Feb 16th)

- (JP) Japan investors bought net ¥215B in foreign bonds v sold ¥3.1T in prior week; Foreign investors bought net ¥1.0T in Japan stocks v bought ¥1.0T in prior week

Market Focal Points/FX

- On the day when the greenback was already under heavy pressure against the higher yielding commodity currencies, a particularly strong employment report from Australia has sent AUD/USD up about 70pips to a 2-week high of $0.7780. While the data series has been volatile, analysts note that the minimal seasonal adjustment in this month's figures implies the perception of labor market malaise may have been overstated. Participation rate uptick to an 8-month high of 64.8% is also impressive. Going into the release, fixed income markets priced in about a 70% chance of an RBA rate cut next month, but after the announcement, that probability has slid to about 56%. Analysts with CBA noted the focus will now shift to next week's quarterly inflation data to sway the RBA bias, but Barclays said the bullish response to these figures from AUD could actually sway the central bank to pressure the currency with a surprise cut.

- Trading in China has remained mixed, and reports suggest the markets could become increasingly more fickle based on the elevated inflows of new trading funds. Among notable press reports, state information chief economist Fan said growth could stabilize and rebound in H2 after yesterday's announcement of a 6-year low in quarterly GDP. One of Premier Li's preferred indicators - power consumption - showed its 2nd consecutive month of decline, as electricity use fell 2.2% y/y and 6.3% m/m to 444B kwh. CICC also lowered China 2015 GDP target to 7.1% from 7.3%, however that target is still above the official 7.0% mark. CICC also maintained its 2015 forecast of 1 more rate cut of 25bps and 6 more RRR cuts.

- Fed's hawkish FOMC voter Lacker spoke in the evening, affirming his preference for a rate hike in June.
Lacker said 2015 GDP would be around 2.5%, unemployment is within reasonable band of natural levels, the risk of asset bubbles is remote, and market volatility once the tightening begins would be manageable. On the close, US also put out its treasury TIC data, revealing that Japan has overtaken China as the largest foreign holder of US debt.

Equities

Market Snapshot (as of 02:30 GMT):

US equities/ADRs:

- NFLX: Reports Q1 $0.38* v $0.67e, R$1.57B v $1.57Be; Seeking shareholders' approval for stock split; +11.8% afterhours

- PNRA: Increased share repurchase authorization to $750M (17.3% of market cap); Making progress on announced plans to refranchise cafes; +11.0% afterhours

- GM: US federal judge rules that GM is entitled to 'shield' from lawsuits related to defective ignition switch incidents that occurred before the company's 2009 bankruptcy - press; +1.1% afterhours

- KMI: Reports Q1 $0.22 v $0.23e, R$3.6B v $4.18Be; increases dividend 6.7% to $0.48 from $0.45; -0.8% afterhours

- SNDK: Reports Q1 $0.62 v $0.74e, R$1.33B v $1.36Be; Guides Q2 R$1.15-1.225B v $1.47Be, gross margin 37-40% v 43% q/q - conf call; -5.9% afterhours

Notable movers by sector:

- Consumer Discretionary: Nine Entertainment NEC.AU +6.1% (sells asset; to increase div and repurchase); Clarion 6796.JP +6.4% (press speculation on FY15/16 results)

- Materials: Fortescue Metals Group FMG.AU +3.8% (Q3 shipment results); Iluka Resources ILU.AU -6.7% (Q1 results); Showa Denko 4004.JP +4.5% (press speculation on Q1 results)

- Technology: Sharp Corp 6753.JP +4.2% (could reach restructure agreement with banks); Skyworth Digital 751.HK +0.4% (Q1 guidance)