AUD/USD hits 2-week high on hotter CPI

Asian Market Update: AUD/USD hits 2-week high on hotter CPI; BHP iron ore output tops prior forecast

Economic Data

- (AU) AUSTRALIA Q2 CONSUMER PRICES (CPI) Q/Q: 0.5% V 0.5%E; Y/Y: 3.0% (9-quarter high) V 3.0%E; Trimmed Mean Q/Q: 0.8% v 0.6%e ; Y/Y: 2.9% (multi-year high) v 2.7%e

- (AU) AUSTRALIA JUN SKILLED VACANCIES M/M: 1.6% (2nd consecutive increase) V 1.8% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 flat, S&P/ASX +0.9%, Kospi flat, Shanghai Composite +0.2%, Hang Seng +0.5%, Sept S&P500 flat at 1,974

Commodities/Fixed Income/Currencies

- Aug gold +0.1% at $1,307/oz, Sept crude oil -0.7% at $102.01/brl, Sept Copper flat at $3.21/lb

- (US) API PETROLEUM INVENTORIES: CRUDE: -0.56M (4th consecutive draw) v -2.5Me, GASOLINE: +3.6M v +1Me, DISTILLATE: +2.5M v +2Me

- GLD: SPDR Gold Trust ETF daily holdings rise 1.5 tonnes to 804.8 tonnes

- SLV: iShares Silver Trust ETF daily holdings fall to 9,989 tonnes from 10,038 tonnes prior (lowest since Jan 17th)

- (CN) China MoF sells 30-yr bonds at 4.76%

- JGB: (JP) Japan's MoF sells ¥1.09T in 1.5% (1.5% prior) 20-year JGBs; Avg yield:1.409% v 1.459% prior; bid-to-cover: 3.77x v 2.71x prior

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1572 v 6.1544 prior setting (weakest Yuan setting since July 8th)

Market Focal Points/Key Themes

- Hotter than expected Australia Q2 CPI sent AUD/USD pair up some 50pips above $0.9430 - a 2-week high. Headline CPI of 3.0% was a 9-quarter high and at the very top of the RBA target range of 2-3%, while the trimmed mean hit a multi-year high of 2.9%. Medical/Hospital services component of healthcare spend saw the highest increase of 4.6% and dwelling purchases rose 1.6%, while more discretionary travel spending fell 3.8% and fuel expenses fell 2.7%. One analyst noted that while it may be too soon to start pricing in RBA rate hikes this year as anticipated by some of the more hawkish brokerage houses, expectations for rate cuts have now been fully extinguished.

- BHP Billiton is up nearly 2% in Sydney after posting an impressive Q4 production report. Iron ore output rose 19% y/y to 56.6MT in the quarter, with FY14 225MT topping 217MT prior forecast. Q4 copper production rose 2% y/y, while petroleum and metallurgical coal rose 9%. BHP also guided FY15 iron ore at 245MT, petroleum at 255MMBOE (vs 246MMBOE for FY14), copper at 1.8Mt (1.7Mt for FY14), and Metallurgical coal 47Mt (45Mt for FY14). BHP CEO said the mining giant expects to maintain strong momentum and remain on track to generate Group production growth of 16% over the two years to the end of the 2015 financial year.

- China's State Administration of Foreign Exchange (SAFE) official noted forex demand and supply was "basically balanced" and that he does not see strong expectations for CNY depreciation. Overnight, PBoC reported June Net Forex Sales of CNY89.4B vs CNY38.7B prior - the first net sales since July 2013.

- BOJ Dep Gov Nakaso stated the central bank easing is having its intended impact, noting domestic economy continues to grow above potential even as cabinet office cut its GDP projections overnight. Nakaso also said domestic demand is firm, while exports continue to move sideways and may only grow modestly. USD/JPY fell about 10pips below 101.40 after Nakaso comments in the absence of more concrete hints that the central bank is closer to considering a fresh round of monetary stimulus.

- Brazil saw another post-World Cup poll showing Pres Rousseff approval rating actually holding steady at 44%. Overall cabinet approval rating was 31%, but 38% said that they would vote for the incumbent in national elections, giving Rousseff a comfortable 16pt margin over opposition candidate Neves. Earlier in the day, Brazil govt cut its 2014 GDP growth forecast to 1.8% from 2.5%

- Ahead of tomorrow's RBNZ rate decision, NZIER Shadow Board sees a much closer case in favor of another 25bp rate hike than in the prior 3 instances - showing 55% support for an increase in the OCR, 33% support for no change and 12% for a rate cut. NZ Fin Min English talked down the Kiwi slightly in the Asia afternoon session, noting the exchange rate is 10-15% overvalued. NZD/USD rose about 20pips above 0.8680 after Australia CPI, but lost most of those gains on comments from English.

Equities

US markets:

- PBYI: Announces Positive Top Line Results from Phase III PB272 Trial in Adjuvant Breast Cancer (ExteNET Trial); +203% afterhours

- TLM: Repsol said to be considering bid for the company - financial press; +15.7% afterhours

- ISRG: Reports Q1 $3.73 v 2.76e, R$512.2M v $499Me; +10.6% afterhours

- BRCM: Reports Q2 $0.65 v $0.61e, R$2.04B v $2.05Be; +2.7% afterhours

- MSFT: Reports Q4 $0.66 (adj) v $0.60e, R$23.4B v $23.1Be; Follow-up: CFO: On an adjusted basis, Q4 EPS was $0.66 v $0.64e comparable estimate

- comments to press ahead of 17:30ET conf call; +1.4% afterhours

- VMW: Reports Q2 $0.81 v $0.79e, R$1.46B v $1.45Be; Narrows FY14 guidance for R$5.96-6.08B v $6.03Be (prior $5.94-6.10B); Affirms FY14 non-gaap op margin about 31% - conf call; +0.5% afterhours

- EA: Reports Q1 $0.19 v -$0.04e, R$775M v $710Me; -0.5% afterhours

- AAPL: Reports Q3 $1.28 v $1.22e, R$37.4B v $38.6Be; iPhone shipments 35.2M v 31.24M y/y (v 35.8Me), iPad shipments 13.3M v 14.62M y/y (v 14.4Me);-0.6% afterhours

- JNPR: Reports Q2 $0.42 v $0.38e, R$1.23B v $1.22Be, guides Q3 $0.35-0.40 v $0.44e, R$1.15-1.20B v $1.26Be; -5.0% afterhours

- IRBT: Reports Q2 $0.28 v $0.21e, R$139.8M v $143Me; -6.6% afterhours

- UIS: Reports Q2 $0.11 v $0.40e, R$806M v $884Me; -7.3% afterhours

- XLNX: Reports Q1 $0.62 v $0.61e, R$613M v $634Me; -9.1% afterhours

Notable movers by sector:

- Consumer Discretionary: Qantas Airways QAN.AU +2.2% (possible plans to split operations, attract foreign investors); McDonald's Holdings Co Japan 2702.JP -1.4%, FamilyMart 8028.JP -1.1% (concerns over China meat scandal spreading to Japan)

- Consumer staples: China Modern Dairy 1117.HK +2.7% (positive profit alert); Shanxi Xinghuacun Fen Wine Factory 600809.CN -1.0% (H1 guidance)

- Financials: Challenger Financial Services Group CGF.AU +2.1% (shareholder raises stake)

- Materials: Zhejiang Great Southeast 002263.CN +10.1% (announces acquisition); China Polymetallic Mining 2133.HK -2.3% (profit warning); BHP Billiton Ltd +1.7% (Q4 production results); Sims Metal Management SGM.AU +5.1% (issues strategic plan); MACA Ltd MLD.AU +4.6% (FY14 forecast)

- Industrials: Gome Electrical Appliances 493.HK +3.1% (positive profit alert); Nippon Shokubai 4114.JP +1.6% (press speculation on Q1 results)