AUD retreats on disappointing jobs data

*Asian Market Update:* Bank of Korea surprises with a 25bp rate hike
on inflation concernts; AUD retreats on disappointing jobs data

!! Economic Data !!
*- (AU) AUSTRALIA DEC UNEMPLOYMENT RATE: 5.0% V 5.1%E (2-yr low);
EMPLOYMENT CHANGE: 2.3K V 25.0KE (9-month low); Participation Rate:
65.8% v 66.1%e (66.0% prior)*
*- (KS) BANK OF KOREA (BOK) RAISES 7-DAY REPO RATE BY 25BPS TO 2.75%
(NOT EXPECTED)*
*- (JP) JAPAN NOV FINAL MACHINE ORDERS M/M: -3.0% V +2.0%E (3rd
consecutive decline); Y/Y:* 11.6% V 17.4%E; Govt cuts assessment on
machine orders
*- (JP) JAPAN DEC BANKRUPTCIES Y/Y:* -3.0% V -6.3% PRIOR
*- (JP) JAPAN DEC PRELIMINARY MACHINE TOOL ORDERS Y/Y:* 63.5% V 104.2%
PRIOR (1-yr low)
*- (NZ) NEW ZEALAND DEC QV HOUSE PRICES Y/Y:* -0.9% V +0.3% PRIOR
(First decline since Sept 2009)
*- (NZ) NEW ZEALAND DEC ANZ COMMODITY PRICE:* 2.0% V 4.5% PRIOR
*- (NZ) NEW ZEALAND DEC NZ CARD SPENDING M/M:* -0.9% V +1.0% PRIOR
*- (TH) THAILAND DEC CONSUMER CONFIDENCE ECONOMIC:* 71.9 V 70.3 PRIOR
*- (US) US DEC FORECLOSURE ACTIVITY M/M: -1.7% V -21% PRIOR; Y/Y:*
-26.3% v -14% PRIOR -REALTYTRAC

!! Markets Snapshot (as Of 12:30amET) !!
- Nikkei225 +0.6%
- S&P/ASX +1.5%
- Kospi -0.4%
- Taiex +0.1%
- Shanghai Composite +0.3%
- Hang Seng +0.5%
- Mar S&P Futures -0.1% at 1,282
- Mar Gold flat $1,386/oz
- Feb Crude oil +0.1% $91.99/brl
- Mar Copper +0.1% at $4.41

!! FX USD Majors Session Range !!
*- EUR/USD:* 1.3100-1.3140
*- GBP/USD:* 1.5740-1.5770
*- USD/CHF:* 0.9660-0.9690
*- USD/CAD:* 0.9850-0.9870
*- AUD/USD:* 0.9915-0.9975
*- NZD/USD:* 0.7610-0.7640
*- USD/JPY:* 82.95-83.15

!! Overview/Top Headlines !!
- Asian equity markets trended higher in the wake of a broad-based
rally in US indices, as investors worldwide breathed a sigh of relief
over success of the Portuguese debt auction. ECB kept the bears at bay
and private demand - particularly from Asian names - took care of the
rest. 9-yr bonds saw particularly strong demand at 3.2x v 2.1x prior
bid/cover. Subsequent *confirmation that China was in the market for
€1.1B in a private placement* for Portugal bonds further helped
EUR/USD extend its broad recovery to about $1.31 before some modest
weakness emerged late in the Asia session. Debt auction from Spain is
in focus later today, along with interest rate decision from ECB and
the BOE. Ahead of the Spain auction, Fin Min Salgado reiterated Spain
will not need external aid, being able to procure sufficient funding
from private sources.

- Rains soaking Australia's Brisbane finally broke as death toll rose
to 15 with over 60 still missing. Early in the session, AUD briefly
cheered reports *the crest of the Brisbane flood will be significantly
below the peak level*. Significant *weakness in the Aussie currency
did reemerge after Australia's job creation in December saw a 9-month
low. Unemployment rate also fell to 5.0% from 5.2%, but the decline
was in part the result of a 0.3pt decline in Australia's participation
rate.* Traders are monitoring today's peak $0.9975 - 38.2% retracement
of the 2-week decline - as critical near-term resistance ahead of the
busy European trading session.

*- Bank of Korea surprised the markets with a 25bps tightening to
2.75% against expectations of a hold -* the 3rd rate hike since the
start of the tightening cycle in mid-2010. BOK was increasingly
concerned over the rising inflationary pressure, noting CPI may not
only stay above its target 3% rate but also may top 3.5% in the first
half of the year. BOK Governor Kim also warned the upward inflation
risks were now higher than in the December forecast, but also conceded
the decision to hike was not unanimous.

*- World Bank released its growth projections for 2011, forecasting
global GDP would fall to 3.3% from 3.9% last year and will not improve
beyond 3.5% in 2012.* World Bank also anticipates the growth in the
red-hot emerging markets will cool from 7% in 2010 to 6% in 2011, with
China falling from 10% in 2010 to 8% in 2011 and 7.8% in 2012. Despite
the slowing growth, World Bank analysts called for China to continue
withdraw liquidity, stating PBoC has the scope for considerable rate
hikes. On a related note, the PBoC continued to strengthen Yuan,
setting midday point below CNY6.60 against USD.

!! Speakers/Geopolitical/In The Press !!
*- (CH) National Bureau of Statistics (NBS) chief economist Yao
Jingyuan:* China's inflation is closely linked to US's QE - Chinese
Press
- (JP) Japan PM Kan is expected to announce cabinet reshuffle by
Friday (moved up from Jan 17th) - Japanese Press
- (JP) DPJ Deputy Secretary-General Yukio Edano to be made Chief
Cabinet Secretary in Japan, replacing Yoshito Sengoku - Japanese press

!! Equities !!
*- INFY: Reports Q3 $0.69 v $0.67e, R$1.59B v $1.6Be*
*- Nippon Steel:* Confirms press speculation of higher rates; Raises
Jan H-beam prices by 11-12% y/y or ¥10K/ton
*- Industrial and Commercial Bank of China: Chairman:* Does not plan
to raise funds in capital markets as speculated in 2010 - China Daily
*- BSL.AU:* According to analysts, company to book a loss in H1
because of rising input costs and stronger AUD - Australian Financial
Review
*- STO.AU:* Final approval has been given for Gladstone LNG project;
First exports expected in 2015
*- KBR:* Guides Initial FY11 EPS $2.05-2.30 v $2.04e; +3.4% afterhours
*- BBBB:* Guides initial Q1 EPS approx $0.24 v $0.36e, Rev approx
$121M v $115Me; Guides initial FY11 $1.82 v $1.92e, Rev $540M v $506Me
- filing; -1.8% afterhours

!! FX/Fixed Income/Commodities !!
*- (CH) China PBoC sells CNY3B of 3-month bills at 2.2588% v 2.1777%
in prior week (3rd consecutive rise)*
*- (CH) PBoC sets yuan mid point at 6.5997 v 6.6038 prior close (new
Yuan high since 2005 revaluation)*
*- JGB: Japan's MoF sold ¥548B in 2.0% (2.0% prior) 30-yr JGBs:* Bid
to cover 5.77x v 2.95x prior
Source: Fxstreet.com