NZD moves below $0.67 on expectation of more RBNZ easing

Asian Mid-session Update: NZD moves below $0.67 on expectation of more RBNZ easing; Australia deficit tops consensus

Economic Data

- (AU) AUSTRALIA MAY TRADE BALANCE: -A$2.7B V -A$2.2BE; 14th straight deficit

- (JP) JAPAN JUN MONETARY BASE Y/Y: 34.2% (2-year low) V 35.6% PRIOR; MONETARY BASE END OF PERIOD: ¥325T V ¥307.4T PRIOR

- (NZ) NEW ZEALAND JUN QV HOUSE PRICES Y/Y: 9.3% V 9.0% PRIOR

- (NZ) NEW ZEALAND JUN ANZ COMMODITY PRICE M/M: -3.1% V -4.9% PRIOR; 3rd straight decline

- (KR) SOUTH KOREA MAY CURRENT ACCOUNT: $8.7B V $8.1B PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +1.1%, S&P/ASX +1.3%, Kospi +0.3%, Shanghai Composite -0.7%, Hang Seng +0.5%, Sept S&P500 -0.1% at 2,068

Commodities/Fixed Income

- Aug gold -0.2% at $1,166/oz, Aug crude oil +0.2% at $57.08/brl, Sept copper +0.2% at $2.63/lb

- USD/CNY: PBoC sets yuan mid point at 6.1171 v 6.1149 prior setting (weakest Yuan setting since Jun 10th)

- (CN) PBoC to inject CNY35B in 7-day reverse repos (3rd consecutive injection); Injects net CNY50B this week v injected CNY35B prior (2nd week of injection)

- (JP) Japan investors sell net ¥45.2B in foreign bonds V sold ¥893T in prior week; Foreign investors buy net ¥298B in Japan stocks v sold ¥254B in prior week

- JGB: (JP) Japan MoF sells ¥2.18T in 0.4% (0.4% prior) 10-yr notes; Avg Yield: 0.513% v 0.450% prior; bid-to-cover: 2.62x v 2.71x prior

Market Focal Points/FX

- Asian indices are trading mixed ahead of a key US non-farm payrolls report following Wednesday's 6-month high in ADP jobs earlier, along with marginal improvement in US ISM manufacturing. Shanghai Composite was once again the notable decliner, falling as much as 3% before a rebound, all in spite of more pronounced gains on Wall St and some positive China developments. Chinese press reported Shanghai Exchange could allow real estate to be used as collateral in margin calls, while CSRC was also said to have loosened some rules on margin trading, including allowing some flexibility on minimum deposits when receiving a margin call. The measures are intended to reduce the frequency of margin calls that has exacerbated volatility in equities, though it could potentially backfire by artificially propping up sour investments. Separately, another local press report suggested China govt could announce new fiscal stabilizing measures based on economic conditions.

- In Japan, BOJ Q2 Tankan survey for CPI saw expectations for 1-year remaining at 1.4%, 3-year was lowered to 1.5% from 1.6% and 5-year unchanged at 1.6%. Note that these forecasts are still well below the 2% target anticipated to be achieved by H1 of 2016. Japan monetary base expansion also slowed to a 2-year low, though still well above 30% y/y.

- Trading in AUD and NZD was fairly active in the wake of some key regional developments. Australia trade balance marked its 14th deficit and was wider than expected, even though imports fell 4% vs prior rise of 4% and export decline slowed to 1% from 6%. China shipments were surprisingly strong, rising to A$6.75B v A$5.85B prior, a 5-month high, and both iron ore and coal shipments showed marginal improvements from last month's lows. AUD/USD fell to its session lows on the release below $0.7630. In New Zealand, the latest Fonterra auction prices fell for the 8th time to their lowest level in 6 years. Both ANZ and ASB cut their expectations of RBNZ rate expectations to 2.50%, implying 75bps in further cuts, sending NZD/USD to 5-year lows below $0.67.

- Greek PM Tsipras has been widely admonished for conflicting messages, expressing more willingness to negotiate with creditors but then defending the anti-austerity position to electorate ahead of the Sunday referendum which is now set to proceed. IMF's Lagarde said she was hopeful the voting will bring more clarity, and it is increasingly evident that creditors are clamoring for referedum to weaken Syriza with the likely YES vote and potentially bring about a change in govt toward a more pro-austerity one. Greek press polls saw expectations for the YES vote at 47.1% vs 43.2% for a NO vote. Moody's also cut Greek sovereign by one notch to CAA3 and placed it on review for a further downgrade.

Equities

US equities/ADRs:

- HNSN: Announces FDA Clearance of the Magellan(TM) 10Fr Robotic Catheter; +22.1% afterhours

- XOOM: PayPal to Acquire Xoom for $25/shr cash or $890M enterprise value; +21.3% afterhours

- PRGS: Reports Q2 $0.35 v $0.31e, R$101M v $98.9Me; +7.3% afterhours

Notable movers by sector:

- Consumer discretionary: Wynn Macau 1128.HK +13.5%, Sands China 1928.HK +14.2%, MGM China 2282.HK +14.4%, Galaxy Entertainment 27.HK +11.2% (speculation that China approves to increase stay lengths for tourist); Pacific Brands PBG.AU +30.8% (raises FY15 guidance); ABC-MART 2670.JP +1.7% (Q1 result speculation)

- Financials: Evergrande Real Estate Group 3333.HK -1.1% (plans to list football jv); Bank of Communications 601328.CN +2.7% (approval to acquire brokerage); CITIC Securities 600030.CN +3.4%, Haitong Securities 600837.CN +4.0%, GF Securities 000776.CN +2.8%, HTSC 601688.CN +6.9% (CSRC and exchanges positive announcements); Challenger Financial Services Group CGF.AU +1.9% (sales of interest in Kapstream Capital)

- Industrials: China Railway Group 601390.CN +2.5% (awarded contracts); Bradken Ltd BKN.AU -0.7% (likely become takeover target); Mazda Motor Corp 7261.JP +2.3% (June US sales); Fuji Heavy Industries Ltd 7270.JP +0.9% (June US sales); Hyundai Motor Co 005380.KR -1.5% (June sales); Nissan Motor Co Ltd 7201.JP +2.6% (June US sales)

- Technology: Pax Global 327.HK +9.0% (H1 guidance); Inspur Electronic Information Industry Co 000977.CN +2.0% (H1 guidance); Alibaba Health Information Technology 241.HK +0.5% (FY14/15 result); Leshi Internet Info & Tech Co Beijing 300104.CN +7.3% (unveils new smartphone)

- Materials: Beadell Resources Ltd BDR.AU -2.7% (Q2 prelim result)

- Energy: Sinopec 386.HK -1.4% (China to ease natural gas price limit)