USD/JPY backs away from ¥125

Asian Mid-session Update: USD/JPY backs away from ¥125; RBA policy outlook favors data dependence over renewed easing bias

Economic Data

- (AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 2.00%, AS EXPECTED

- (AU) AUSTRALIA Q1 CURRENT ACCOUNT BALANCE (A$): -10.7B V -10.8BE; NET EXPORTS OF GDP: 0.5% V 0%E

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.5 v 113.5 prior

- (NZ) NEW ZEALAND Q1 TERMS OF TRADE INDEX Q/Q: 1.5% V 1.7%E; 1-year high and first rise in 3 quarters

- (JP) JAPAN APR LABOR CASH EARNINGS Y/Y: 0.9% (3-month high) V 0.3%E; REAL (EX-INFLATION) EARNINGS Y/Y: +0.1% V -2.7% PRIOR

- (JP) JAPAN MAY MONETARY BASE Y/Y: 35.6% V 35.2% PRIOR; MONETARY BASE END OF PERIOD: ¥307T V ¥306T PRIOR

- (KR) SOUTH KOREA MAY CPI M/M: 0.3% V 0.2%E; Y/Y: 0.5% V 0.4%E; CPI CORE Y/Y: 2.1% V 2.0% PRIOR

- (KR) SOUTH KOREA APR CURRENT ACCOUNT: $8.1B V $10.4B PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.1%, S&P/ASX -0.9%, Kospi -0.9%, Shanghai Composite +1.2%, Hang Seng -0.3%, Jun S&P500 flat at 2,109

Commodities/Fixed Income

- Aug gold -0.1% at $1,187/oz, Jul crude oil -0.1% at $60.14/brl, Jul copper +0.2% at $2.72/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 1.8 tonnes to 714.1 tonnes

- JGB: (JP) Japan MoF sells ¥2.18T in 0.4% (0.4% prior) 10-yr notes; Avg Yield: 0.450% v 0.434% prior; bid-to-cover: 2.71x v 2.24x prior

- (CN) PBoC won't conduct open market operations (OMO) in today's session (13th consecutive halt)

Market Focal Points/FX

- Asian equity markets were flat for much of the morning session but have been rolling over in the afternoon, with Nikkei returning from break modestly in the red and Shanghai Composite entering its recess unchanged after strong gains. Some of the initial sugar high in China was attributed to positive remarks from economists on policy implications after yesterday's PMIs - ANZ anticipates fiscal policies and targeted measures to remain in play for the balance of the year, and Goldman Sachs said any modest rebound in manufacturing is "not enough to change the overall policy direction.... the government will likely release further loosening initiatives in the coming months." Reversal in equities also coincided with a technical failure in risk-gauge USD/JPY, after the pair quickly reversed course following a test of a 13-year high of ¥125. Lastly in China, Moody's raised its Outlook on the property market to Stable from Negative, forecasting sales value growth of 0%-5% "over the next 12 months to June 2016, compared with a decline of 7.8% in 2014, driven by the policies implemented by the authorities since the second half of 2014."

- In Europe, leaders of creditor nations to Greece met in Berlin and reportedly drafted a "final offer" to be presented to Greek govt and PM Tsipras, rejection of which was speculated to push Athens toward default. Reports indicated the document would contain economic overhaul guidelines for Greece to enact following the latest stall in negotiations. Subsequent comments from German govt spokesperson indicated Merkel and Draghi were in agreement that talks on Greece relief need to step up in intensity.

- AUD/USD also saw a fair bit of volatility among the dollar majors, as traders digested the changes in the latest RBA policy stances. As expected, the central bank left rates on hold at 2% and reiterated its comments on currency, where "further depreciation seems both likely and necessary." The policy outlook component of the statement was clouded by data-dependency against the expectation of an outright return to an easing bias in light of the latest soft CAPEX figures out last week. RBA said "information on economic conditions in the period ahead" would drive the Board's assessment of the outlook and the current stance of policy. AUD/USD spiked up about 40pips on the release, rising to $0.7660 after testing a 7-week low of $0.76 going into today's decision.

- Among key movers in equities, Hyundai Motors in South Korea was down over 8% following afterhours monthly vehicles sales report showing a steep decline of 6.4% y/y. China property names rose after a monthly report that average price of new residential properties in 100 major cities in May M/M rose +0.5% m/m - first increase since February.

Equities

US equities/ADRs:

- PVH: Reports Q1 $1.50 v $1.38e, R$1.88B v $1.88Be; approves $500M buyback program over 3 years (5.7% of market cap); +4.1% afterhours

- QUNR: Reports Q1 -$0.32 v -$0.44e, R$108.3M v $101M; To offer 8M ADS; +2.9% afterhours

- ODFL: Reports May LTL tons/day of 9.6% v 9.7% y/y, Guides Q2 LTL tons/day 9.5-10% (prior 9-10%); -2.1% afterhours

Notable movers by sector:

- Consumer discretionary: Retail Food Group RFG.AU -1.4% (reaffirms guidance)

- Financials: Wuzhou International Holdings 1369.HK -15.1% (share placement); IOOF Holdings -0.8% (acquisition); Fantasia Holdings Group 1777.HK +6.0% (April result); Shanghai Shimao 600823.CN +6.7% (Shanghai property price rise)

- Industrials: Zoomlion Heavy Industry Science and Technology 1157.HK +8.1% (to acquire environmental company); Liaoning SG Automotive Group 600303.CN % (private placement); Dalian Port PDA Co +5.4%, China Cosco Holdings +2.2% (FTA between China and South Korea); Wanxiang Qiaochao 000559.CN +5.8% (Beijing to ease rules for electric cars)

- Technology: Leshi Internet Info & Tech Co 300104.CN +2.1% (to invest in Hong Kong)

- Healthcare: Virtus Health VRT.AU -16.5% (lowers FY15 guidance); Luye Pharma Group 2186.HK -3.8% (to scrap Jialin stake transaction)

- Telecom: NTT DoCoMo 9437.JP +3.4% (Nikkei reports to boost ROE)