AUD rallies on improved Australia retail sales and less dovish RBA

Economic Data

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

- (AU) AUSTRALIA JUNE RETAIL SALES M/M: 0.7% V 0.4%E; 4-month high

- (AU) AUSTRALIA JUNE TRADE BALANCE: -A$2.9B V -A$3.0BE; 14th straight deficit

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.9 V 112.5 prior

- (JP) JAPAN JUNE LABOR CASH EARNINGS Y/Y: -2.4% (biggest decline in 5 years) V +0.9%E; REAL (EX-INFLATION) EARNINGS Y/Y: -2.9% V 0.0% PRIOR

- (JP) JAPAN JULY MONETARY BASE Y/Y: 32.8% (2-year low) V 34.2% PRIOR; MONETARY BASE END OF PERIOD: ¥325.7T V ¥325T PRIOR

- (NZ) NEW ZEALAND JULY ANZ COMMODITY PRICE M/M:-11.2% V -3.1% PRIOR

- (NZ) NEW ZEALAND JULY QV HOUSE PRICES Y/Y: 10.1% V 9.3% PRIOR; Biggest increase since Nov 2007

- (KR) SOUTH KOREA JULY CPI M/M: 0.2% V 0.2%E; Y/Y: 0.7% V 0.7%E; CPI CORE Y/Y: 2.0% V 2.0% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.2%, S&P/ASX +0.6%, Kospi +0.4%, Shanghai Composite +0.1%, Hang Seng -0.5%, Sept S&P500 flat at 2,090

Commodities/Fixed Income

- Dec gold -0.7% at $1,082/oz, Sept crude oil +0.7% at $45.47/brl, Sept copper -0.2% at $2.34/lb

- (CN) PBoC to inject CNY50B in 7-day reverse repos (12th consecutive injection)

- JGB: (JP) Japan MoF sells ¥2.19T in 0.4% (0.4% prior) 10-yr notes; Avg Yield: 0.400% v 0.513% prior; bid-to-cover: 2.84x (highest since Jan) v 2.62x prior

- (KR) South Korea sells 30-yr govt bond, avg yield at 2.680%

Market Focal Points/FX

- Australian dollar is sharply higher in the session, first helped by better than expected economic data and then a more hawkish set of comments from the RBA in today's statement. Retail sales hit a 4-month high, while trade deficit was lower than expected thanks to multi-month highs in export value of iron ore and coal, sending AUD/USD up some 30pips to $0.73. The exchange rate added another 40pips on RBA decision, as it removed a key phrase in the statement calling for "further AUD depreciation as both likely and necessary" in place of a much more neutral "currency is adjusting to declines in commodity prices." RBA was also a bit more upbeat on employment, noting "economy is associated with somewhat stronger growth of employment and a steady rate of unemployment over the past year." S&P/ASX was off its highs on the statement but still up 0.3% at 5,700, while the yield on Aussie 10-year rose some 3bps above 2.70%

- Shanghai Composite has entered its midday break at the highs up 1.3% on further steps by Beijing to slow down the selloff. Securities regulators announced a revision to the rules on short selling whereby investors borrowing shares must wait one day to pay back loans - currently investors can do so on the same day - thereby reducing single day-trading momentum activity that exacerbates volatility. Separately PBoC injected another CNY50B into the system via 7-day reverse repos, while a press report citing BoCom chief economist called for more RRR reductions to boost liquidity.

- Japan pursuit of a virtuous cycle is knocked for a loop with a notable disappointment in today's wage inflation data. Labor cash earnings posted its biggest y/y decline in 5 years of -2.4%, while ex-inflation drop was even more severe at -2.9%. Expansion of monetary base is also slowing despite BOJ officials consistently maintaining they are prepared to adjust policy in response to economic developments. BOJ Dep Gov Iwata said further JPY weakness may not materialize as rate differentials shift with tighter Fed policy, since some of that adjustment may have already been factored in.

Equities

US equities/ADRs:

- IDTI: Reports Q1 $0.31 v $0.29e, R$161M v $161Me; +8.8% afterhours

- CTRP: Reports Q2 $0.15 v -$0.03e, R$408M v $408Me; +4.0% afterhours

- DPLO: Reports Q2 $0.16 v $0.12e, R$808M v $737Me; +2.7% afterhours

- CYH: Reports Q2 $1.01 v $0.91e, R$4.88B v $4.98Be; Plans to Spin off 38 Hospitals and Quorum Health Resources; +1.2% afterhours

- MCHP: Reports Q1 $0.69 v $0.71e, R$534M v $556Me; -1.9% afterhours

- CAR: Reports Q2 $0.84 v $0.68e, R$2.17B v $2.26Be; -3.0% afterhours

- ALL: Reports Q2 $0.63 v $0.94e, R$8.98B v $7.88Be; -4.9% afterhours

Notable movers by sector:

- Consumer discretionary: Car Inc 699.HK -0.7% (issue notes); Lifestyle International Holdings 1212.HK +1.9% (H1 result); Japan Tobacco Inc 2914.JP -2.9% (H1 result)

- Consumer staples: Haoxiangni Jujube Co 002582.CN -3.8% (H1 result)

- Financials: China Vanke Co 2202.HK +1.6% (July result); Guangzhou R&F Properties 2777.HK -1.3% (July result); Hang Seng Bank 11.HK -0.3% (H1 result); Dalian Wanda Commercial Properties 3699.HK -1.5% (to close stores and exit karaoke); Bank of East Asia 23.HK -2.8% (H1 result); Beijing Capital Land 2868.HK -2.5% (July result); Suncorp-Metway SUN.AU +2.0% (FY15 result); CITIC Securities 6030.HK -1.7% (suspends short selling)

- Industrials: Anhui Ankai Automobile Co 000868.CN +0.4% (H1 result); CIMC Enric Holdings 3899.HK -9.2% (H1 guidance); Jiangling Motors Corp Ltd 000550.CN -3.4% (July result); Suzuki Motor Corp7269.JP +4.6% (Q1 result); Kia Motors Corporation 000270.KR +1.9% (July car sales); Hyundai Motor Co 005380.KR -0.4% (July car sales)

- Technology: Tencent 700.HK -1.3% (going private bid for Elong)

- Materials: Jiangsu Aucksun Co 002245.CN +1.1% (H1 result); Aluminum Corporation of China Limited 2600.HK -1.1% (investment in China Rare Earth)

- Energy: Shanxi Lanhua Sci-Tech Venture Co 600123.CN +0.6% (H1 result); Shanghai Taisheng Wind Power Equipment 300129.CN +3.3% (H1 result)

- Healthcare: Guangdong Zhongsheng Pharmaceutical Co 002317.CN +4.2% (H1 result)