Asian Market Update: Falling Australia jobless rate, rising full-time employment lifts AUD/USD above 0.90 and S&P/ASX to 12-month high


ECONOMIC DATA

- (JP) Japan Aug Current Account: ¥1.17T v ¥1.15Te; Adjusted Current Account: ¥1.23T v ¥1.21Te; prior; Trade Balance: ¥303.7B v ¥285Be

- (AU) Australia Sept Unemployment Rate: 5.7% v 6.0%e; Employment Change: 40.6K v -10Ke

- (AU) Australia Sept Full-time Employment Change: 35.4K v -30.8K prior; Part-time Change: 5.2K v 3.8K prior; Participation Rate: 65.2% v 65.1%e

- (KS) South Korea Aug Money Supply M2: 10.0% v 9.7% prior; L: 8.9% v 9.7% prior

- (TH) Thailand Sep Consumer Confidence Economic: 68.4 v 67.4 prior

- (JP) Japan Sept Bankruptcies Y/Y: -18.0% v -1.0% prior

- (JP) Japan Sept Eco Watchers Survey Current: 43.1 v 42.5e; Outlook: 44.5 v 44.0 prior


SPEAKERS/PRESS

- Asian equity markets look to put in another session of gains following a strong start to the earnings season in the wake the first Dow component to report Alcoa posting a Q3 3-cent profit against estimates of a 9-cent loss. With about an hour to go in Tokyo, Nikkei225 is up 0.2% and Hang Seng is up 0.4%. Sydney is outperforming once again after a very strong September jobs report in Australia, as S&P/ASX rose 1.6% above 4,770 to its best level in 12 months. Korea's Kospi is around unchanged, underperforming for 3rd consecutive day ahead of the Bank of Korea decision tomorrow, while Taiex is the only regional decliner, falling 0.9% on Taiwan central bank intervention. Ahead of the Thursday session, front-month S&Ps are up an impressive 0.9%, with US markets looking to open much higher on Alcoa-inspired rally.

- Just one day after the Reserve Bank of Australia became the first G-20 central bank to tighten interest rates, an unexpected decline in jobless rate justified the policymakers' optimism. Unemployment fell to 5.7% v expected 5.8%, and the economy created 40.6K jobs v expected loss of 10K. Particularly notable was the rise in the full-time component of the jobs report which grew by 35K - the first expansion in 5 months. Speaking after the release, Australia's labor minister noted that the improvement is in evidence to positive impact of fiscal stimulus, also warning that economy remains fragile and accommodative conditions need to be preserved.

- With Bank of Korea interest rate decision on tap for tomorrow, South Korean Press reported that the central bank's Governor Lee may have signaled a rate hike at the upcoming policy meeting on concerns related to rising property prices. According to one poll, the Bank of Korea is expected to leave rates unchanged at 2.00% at tomorrow's meeting.
Additionally, in South Korea, the Finance Minister reiterated that the government would maintain an expansionary policy as the domestic demand recovery remained weak.

- Elsewhere in Asia, Japan's Prime Minister Hatoyama was said to consider tax exemptions and cash payouts for low-income households as part of the new administration's election promise for overall tax relief and increased govt subsidies. Japanese press report further noted the government would consider additional stimulus measures along with canceling of the tax surcharges on cars and gasoline. In Taiwan, an article disclosed that the Taiwan Central Bank was seeking to identify foreign exchange speculators as it is concerned about the appreciation of the Taiwan dollar. According to the Commercial Times, the central bank plans to examine bond sales data from Sept on the belief that speculators maybe holding their funds in the fixed income market. Over in New Zealand, Finance Minister English reiterated his discomfort with the high level of NZD, suggesting the currency has been lifted by external factors. Overall, New Zealand administration and monetary authorities have been increasingly vocal regarding the impact of rising currency levels on the nation's exporters.


EQUITIES 

- In specific equities, both National Australia Bank and ANZ bank followed the RBA hike with an equal 25bp increase to their variable mortgage lending rates. In other Aussie banking news, Westpac was ordered to pay NZ$918M in back taxes and penalties by New Zealand court. Westpac said the provision would impact its Tier 1 capital levels by 25 bps. Elsewhere in Sydney, Australia's press commented on the recent Olympic Dam mine accident at BHP, suggesting the mine capacity could be cut in half. Response to BHP noted that mining is continuing at the site while the company is evaluating the impact on production. Alumina cheered the positive report out of Alcoa, forecasting rising aluminum prices in Q3 amid the overall recovery in demand.

- Over on the Nikkei, Elpida confirmed earlier press report it would shift its focus in chip production to the smaller 45nm DRAM version, planning to invest as much as ¥30-40B in the transition. In telecom, Japanese press saw part orders from Kyocera rising as much as 10-20% in the most recent quarter.


CURRENCIES/COMMODITIES 

- In currencies, US dollar traded lower across the board once again following the better than expected Aussie jobs report.
AUD outperformed, leaping above the 0.90 handle v USD, NZD/USD took out 0.74 after finding resistance at that level in the US session, and USD/CAD traded down to 1.0540. In European majors, EUR/USD gained over 100 pips to 1.4770 and Sterling briefly broke above 1.60. Japanese Yen remained firm, with USD/JPY approaching fresh 9-month low 88.00 handle. In emerging Asian FX, dealers noted Taiwan Central Bank buying USD to curb TWD advance.

- Earlier during the session, Spot Gold prices rose to a fresh record high above $1,050/oz. Overall gold has risen to new record highs in 3 consecutive sessions. On today's Asian session, gold prices benefited from the weakness in the dollar, particularly against the commodity currencies. Despite the sharp move higher in gold prices, the commodity continues to see demand from funds. Earlier today, the SPDR Gold Trust ETF disclosed that its holdings rose by 9 metric tons to a total of 1,109 metric tons. Looking ahead, gold prices could receive some direction from the later today interest rate decisions from the ECB and Bank of England. Additionally, the US Federal Reserve's weekly balance sheet data will be released following today's US equity session.

- Crude oil prices are higher and above $70/bbl on the weaker dollar and upbeat Australian employment data. During yesterday's NY floor session, oil prices declined following the rise in weekly US gasoline inventories (DOE CRUDE: -975K V +2ME; GASOLINE: +2.9M V +1.2ME) and the weakness in the Euro.

- In corporate related commodities news, Alcoa reported better than expected Q3 earnings as the company's costs and expenses declined on a year over year basis. In terms of its outlook for markets, Alcoa noted that in the second half of 2009 some of its key markets are stabilizing. Alcoa expects aluminum consumption to rise by 11% in H2 vs. H1, while the company sees Chinese demand increasing. Alcoa expects its automotive segment sales to decline 15-20% y/y this year, while it sees its beverage segment results flat. In terms of supply and demand conditions, Alcoa noted that aluminum stockpiles are near all time lows.