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TradeTheNews.com Asian Market Update: China non-manufacturing PMI comes in at a 5-month high; Tepco struggles to plug crack in reactor no.2; USD/JPY seen at ¥85-90

***Economic Data***
- (CH) China MAR Non-manufacturing PMI: 60.2 v 44.1 prior (5-month high) - From April 3rd
- (JP) JAPAN Q1 INITIAL POST-QUAKE TANKAN SURVEY LARGE MANUFACTURERS INDEX: 6 v 6 INITIAL; LARGE MFG OUTLOOK: -2 v +2 INITIAL
- (KS) SOUTH KOREA MAR FOREIGN EXCHANGE RESERVE: $298.6B V $297.7B PRIOR (multi-month high)
- (AU) AUSTRALIA MAR ANZ JOB ADVERTISEMENTS M/M: 1.3% V 1.1% PRIOR (11th consecutive month of increases)
- (AU) AUSTRALIA MAR TD SECURITIES INFLATION M/M: 0.6% V 0.2% PRIOR (highest level since Dec 2009); Y/Y: 3.8% V 3.6% PRIOR
- (NZ) NEW ZEALAND MAR ANZ COMMODITY PRICE: 4.7% V 2.7% PRIOR
- (JP) Japan MAR Monetary Base y/y: 16.9% v 5.6% prior

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 +0.6%
- S&P/ASX +0.7%
- Kospi -0.7%
- Taiex closed
- Shanghai Composite closed
- Hang Seng +1.1%
- Singapore Straits Times Index +0.6%
- Jun S&P Futures -0.2% at 1,325
- Spot Gold +0.1% $1,430/oz
- May Crude oil +0.4% at $108.32/brl
- May Brent +0.2% at $119.20
- May Copper -0.7% at $4.22
- May Wheat +1.0% at $7.67

***FX USD Majors Session Range***
- EUR/USD: 1.4268-1.4217
- GBP/USD: 1.6140-1.6104
- USD/CHF: 0.9263-0.9233
- USD/CAD: 0.9645-0.9622
- AUD/USD: 1.0416-1.0378
- NZD/USD: 0.7702-0.7672
- USD/JPY: 84.38-84.03

***Overview/Top Headlines***
- Stronger US payrolls on Friday have started the Asian markets off to a positive Monday. Shanghai and Taiwan were closed for holiday, Hong Kong rose over 1%, Nikkei225, Taiex and ASX all rose over 0.5% throughout the session. Korea's Kospi fell over 0.5% after Korea was spotted buying dollars in the market on Friday and again today. AUD/USD made a fresh 29-year high at $1.0410, NZD/USD made a fresh 9-week high at $0.77 handle.

- Japan released Q1 initial post-earthquake Tanakan survey, large manufacturers' index stayed unchanged at 6 but outlook fell to -1 v 2 on the initial reading. This was an update to last week's data as it was reported that most had responded before the survey was taken. BoJ commented that its not be appropriate to compare Tankan data pre and post the earthquake.

- An article in the FT, despite expectations of Yen repatriation following earthquake, demand for foreign bonds among Japanese investors remains strong. Former MoF official Sakakibara (aka Mr. Yen) said, would not be surprised to see USD/JPY reach ¥85-90 in the coming months. Nuclear issue is likely to hurt the yen, also need to worry about foreign money leaving Japan due to nuclear crisis. Shortly after similar comments from former BoJ official Hirano: Expects JPY to weaken in med to long-term as BoJ maintains policy; BoJ will not hesitate to increase bond purchases from market if needed to calm markets.

- Over in Australia Qantas announced it was selling fleet of 21 Boeing 737-400 planes due to "uncertain demand". This follows last week's announcement that they would retire some of their planes in order to offset rising fuel costs in H2 taking capacity down 8% to 14%; A$165M impact from flooding and earthquake. WesFarmers announced coal prices to increase approx +53% from April 2011 to June 2011; Force Majeure will be lifted for all export contracts in early April.

- Over the weekend, Tepco discovered a crack in concrete pit above Fukushima No2 reactor; Radiation leaks continue despite concrete poured into the pit. Containment work using water-absorbent polymers to prevent additional water from coming out continued this weekend. Tepco said it had used tracer dye today in the water for reactor no. 2 pit; However it is not leaking into the ocean. So they will have to continue to problem solve. Japan Nuclear Agency: Will install an underwater silt fence that will contain the water with radiation and prevent it from going out to sea. Lastly, the Govt said that the crisis is over however it was going to take some months to contain radiation leaking.

***Speakers/Geopolitical/In the press***
- (AU) HSBC chief economist for Australia/New Zealand Paul Bloxham: RBA likely to resume tightening interest rates in Q3 because of rising wage pressure - Sydney Morning Herald
- (AU) According to Australia's BIS Shrapnel forecaster, construction activity in Australia expected to rise 20% annually in FY11/12 and FY12/13
- (KS) South Korea's biggest refiner SK Energy announced it would cut petrol and diesel prices for the next 3 months to help South Korea govt tackle inflation

***Equities***
- QRN.AU: Expects to accept 660 voluntary redundancies to occur in the next FY and 600 coming in the next week; Will cost A$75M in cash payouts but payback within 11-months - Australian Press
- LEI.AU: Thiess unit spokesperson: Company took "Inappropriate" risk to win A$3.5B contract for desalination plant for Victorian Govt - Australian Financial Review
- TXN: Shortages of controller ships used in hard drives prices of HDDs in OEM market are expected to increase 5-10% in Q2 from channel prices increasing 10-15% recently - DigiTimes
- EQN.CA: Minmetal makes an offer of C$7.00/share cash to buyout the remaining shares it doesn't own totaling C$6.3B - US Financial Press

***FX/Fixed Income/Commodities***
- (CH) China UMetal's Zhao: Stopped new orders for Japan scrap steel on radiation concerns
- (KS) South Korea Finance Ministry sells KRW1.4T of 3-year 3.96% v 3.94% prior
- (AU) Australia banana prices are expected to stay higher until approx mid-winter; Prices have reached A$15/kg since cyclone Yasi - The Australian

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