Asian Market Update: Japan jobless rate falls and household spending rises, but Nikkei still extends slide; Currencies range ahead of US jobs data


ECONOMIC DATA

- 19:30 (JP) Japan Aug Jobless Rate: 5.5% v 5.8%e (First decline in 6 months); Job-to-Applicant Ratio: 0.42 v 0.42e

- 19:30 (JP) Japan Aug Household Spending Y/Y: 2.6% v -0.2%e (Biggest rise since Jan 2008)

- 19:30 (JP) Japan Sept Monetary Base: 4.5% v 6.1% prior

- 20:30 (AU) Australia Sept TD Securities Inflation M/M: 0.0% v 0.0% prior; Y/Y: 1.3% v 1.7% prior


SPEAKERS

- Asian equity markets are trading sharply lower, tracking an October rude awakening in the US markets, all despite some fairly benign economic data from Tokyo. Japan unemployment rate fell to 5.5% from 5.7% in spite of expectations for a rise to 5.8%, and household spending registered its biggest increase since 2008, topping estimates of a small contraction, but Nikkei still fell about 2.5% to fresh 2-month low. Elsewhere, S&P/ASX and Taiex were off by 1.5%, with markets in China and Korea remaining closed for bank holiday.

- Speaking following the release of better than expected jobs data, Japan's government spokesman noted that employment conditions remain severe, pledging the administration would keep its eye on conditions and consider additional steps for relief. Elsewhere in Japan, Finance Minister Fujii looked to minimize the extent of his damage on the currency market front, promising to avoid discussion of the rising Yen at the G-7 meeting this weekend. In Australia, Assistant Treasurer Sherry saw improvement in credit lending over the medium-to-longer-term, and HKMA's incoming chief Chen promised to uphold FX stability through USD peg

- Adding to bearish sentiment in US markets, a pair of Fed officials spoke cautiously in terms of both outlook and policy prospects. Sandra Pianalto's commentary was particularly telling of the uncertainty at the Fed, as she saw the policymakers being ready to act in either direction with a potential expansion in QE if necessary. Atlanta's Lockhart saw unemployment remaining "frustratingly high" for some time, but also called for a strong Q3 growth of as much as 2.5-3.0% before tapering off below 3% in 2010. In other notable afterhours speakers in the US, Meredith Whitney's op-ed WSJ saw an ongoing credit crunch for small business, estimating as much as $1.5T in future spending capacity cuts.


EQUITIES

- In individual equities, Toyota President Toyoda spoke to the press, putting a 2009 global production target at 7.3M units, but also noting that an increase in sales is not sufficient to return Toyota to profit because of the strong currency factors. In terms of regional estimates, Toyoda saw China's overall auto market expanding beyond 10M vehicles, outpacing demand in the US. Elsewhere on the Nikkei, Nissan filed to sell ¥100B in 4-yr bonds, and Nikon denied press speculation it may post a lower quarterly loss. Outside Tokyo, BlueScope Steel CEO saw stronger than expected demand at one of its plants, and Daewoo Shipbuilding received a $460M order from Vale.


CURRENCIES/COMMODITIES

- US Dollar strengthened across the board in early trading but retreated later in the day on reluctance by buyers to take the Euro down to 3-week lows ahead of the Non-farm payrolls data. 1.45 appears pivotal in EUR/USD, USD/CHF ranged between 1.04-1.0440, while GBP/USD briefly fell below 1.59. In commodity FX, Kiwi dollar was widely sold, hitting 1-week lows against USD and 2-week lows against JPY at 0.71 and 63.50. Japanese Yen was moderately stronger across the board, with USD/JPY falling below 89.20 and EUR/JPY below 129.70, all despite the plummeting 10-yr JGB yields from 1.30% to 1.25%. In commodities, front-month crude traded sideways just above $70.00, and spot gold ticked slightly higher above $1,000.