Daily Forex Fundamentals | Written by Trade The News | Jul 10 08 04:22 GMT |
Asian Market Update
More evidence that China's overall trade surplus may have peaked

China's trade surplus falls -11.8% y/y in 1H08: (CH JUNE TRADE SURPLUS: $21.35B V $22.35B expected, $20.21B prior) China's imports outpaced exports once more, as they have all this year with the exception of March, providing more evidence that China's overall trade surplus may have peaked. - Aussie jobs market surprisingly strong during June: (AU JUNE EMPLOYMENT CHANGE: 29.8K V 10K expected, prior revised to -25.6K from -19.7K; UNEMPLOYMENT RATE: 4.2% V 4.3% expected, 4.3% prior; PARTICIPATION RATE: 65.3% V 65.3% expected, 65.2% prior) Analysts were quick to downplay the significance of the data, with many pointing out that statistical payback was to be expected after last month's shocker. 'You can't read too much into it,' said Adam Carr at UBS. 'The labor force is a lagging indicator, and the leading indicators of employment are telling us that things are going to moderate in second half of the year.' The AUD/USD was soft going into the number, but spiked from 0.9555 to 0.9615 in the moments after the release. It is currently hovering around 0.9595.

New Zealand manufacturing contracts for the third time in four months: (NZ JUNE BUSINESS NZ PMI: 45.7 V 47.9 prior, prior revised from 49.3; This is the second lowest result recorded since the survey began in 2002) The current run of manufacturing data is showing 'a more persistent trend downwards,' said Business NZ chief executive Phil O'Reilly. 'The first half of 2008 has been the toughest six months manufacturers have had to deal with for some time, with the possibility of ongoing contraction for the next half of 2008.'

Japanese wholesale price inflation at a 27yr high: (JP JUNE DOMESTIC CORPORATE GOODS PRICE INDEX: MOM: 0.8% V 0.6% expected, 1.1% prior; YOY: 5.6% V 5.3% expected, 4.7% prior) Analysts said that Japanese companies seem to be exhibiting a little more determination to pass on more of the cost increase, suggesting that continuous inflation pressure, coupled with a weakening economy, may make life difficult for the Bank of Japan. 'On top of rises in crude oil prices, some final goods prices are starting to increase so the upward price pressure may spread to consumer prices,' said Seiji Adachi at Deutsche.

Japan's current account narrows on a y/y basis for a third consecutive month: (JP MAY CURRENT ACCOUNT: ¥2.0T V ¥1.92T expected, ¥1.38T prior; ADJUSTED: ¥2.03T V ¥1.96T expected, ¥1.51T prior) Japan had a surplus of ¥2.0T in its current account, down -5.9% from a year earlier. Exports grew 4.2% during May, with solid demand from emerging Asia offsetting the impact of a U.S. slowdown. However, few analysts expect Japan's export momentum to continue, and the trade surplus is expected to deteriorate over the coming months as higher oil prices boost the value of imports.

Australia's median inflation expectations stays at a 15yr high: (AU JULY CONSUMER MEDIAN INFLATION EXPECTATION: 5.9% V 5.9% prior) The survey found that only 7.5% of the 1,200 respondents believed that inflation would come back down to within the RBA's target band of 2%-3% in the coming year, off from an 8.0% reading in June. 'Although inflationary expectations did not rise in July, the effect of income tax cuts and the path of crude oil prices will be significant factors in determining whether inflationary expectations fall in the next few months,' said Melbourne Institute research fellow Sam Tsiaplias.

Equities: At 0:04 EDT Japan's Nikkei is +0.56%, the S&P/ASX200 is -1.31%, South Korea's KOSPI is -0.10%, and the Shanghai composite index is -0.74%. The S&P500 futures contract gained +0.09% since the U.S. close, last trading at 1,249. Chipmakers and commodities related companies listed in Tokyo traded lower, dragging the benchmark Nikkei index down to 12,950 in mid morning. Since then the index has rebounded, with short-covering of financials pushing the index above 13,100. The S&P/ASX200 remains stuck below 5,000, with financials, retailers and miners generally trading lower. Technology companies and automakers pushed the KOSPI lower, while airlines listed in Shanghai also traded lower.

Commodities: Nymex crude oil gained +0.34% between 18:00 EDT and 0:03 EDT, last trading at $136.51/bbl. Spot gold gained +0.19%, last trading at $930.90/oz.

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