Grenade attack ahead of Olympics; Housing data supports AUD
Grenade attack ahead of Chinese Olympics: China's state media reports that rioters drove two vehicles into a border station in Xinjiang, killing sixteen and injuring sixteen others. Xinjiang borders the Tibet Autonomous Region to the south, and China's northwestern Muslim region. Xinjiang is home to a large Uighur Muslim population, many of them discontent under strict Chinese rule. China has said that Uighur 'terror' groups want to disrupt the Beijing Olympic Games which start on Friday.

Australia's quarterly house prices dip for the first time in almost three years: (AU Q2 HOUSE PRICE INDEX QOQ: -0.3% V -1.3% expected, 0.4% prior; YOY: 8.2% V 8.0% expected, 13.2% prior; The q/q decline is the first since Sept 2005) Analysts said the relative resilience of the housing sector was a relief after a run of dismal news on household spending and sentiment, supporting the AUD during Asian trade. Housing has been seen as an area of vulnerability for Australia, and today's better than expected data removed any suggestion of an interest rate cut at this week's RBA meeting. The data helped the AUD/USD to recover after a wobbly start to the session, with traders hearing chatter of a 0.9280 'Do Not Touch' option. The next downside targets are seen at 0.9275 (May 2 daily low) and 0.9200 (200day MA)

Aussie job ads continue their downward trend into July: (AU July ANZ Job Advertisements MoM: -0.3% v -3.0% prior) ANZ said the number of job advertisements in Australia has fallen for the third successive month in yet another sign the economy is slowing. ANZ head of economics Warren Hogan said jobs growth was likely to slow in coming months, and predicted the jobless rate would climb to 4.9 per cent by June 2009, up from 4.2 per cent in June 2008. 'The overall trend in job advertisements continues to weaken, indicative of a softening in hiring intentions across Australia in 2008,' he said. 'The job advertisements series provides further evidence that the current level of interest rates is achieving the RBA's desired slowing in domestic economic growth.'

New Zealand wage inflation remains elevated: (NZ Q2 LABOR COST PRIVATE SECTOR QOQ: 0.8% V 0.8% expected, 0.7% prior; PRIVATE WAGES EX OVERTIME: 0.8% V 0.8% expected, 0.7% prior) Analysts said the data isn't significant, since the Reserve Bank has already started the easing cycle and this data certainly won't prevent that continuing.

Equities: At 0:04 EDT Japan's Nikkei is -0.82%, the S&P/ASX200 is -0.07%, South Korea's KOSPI is -2.63%, Hong Kong's Hang Seng index is -1.16%, and the Shanghai composite index is -0.89%. The S&P500 futures contract lost -0.07% since Friday's close, last trading at 1,259.40. The Nikkei dipped below 13,000 during the morning session, with automakers and financials leading much of the downside. The S&P/ASX200 is marginally lower on few catalysts. Shares of real estate company Lend Lease are lower by more than -10% after announcing that its operating profit could fall by as much as 15% in the current year. Large Australian banks recovered some of their recent losses, but resource companies remain under pressure. Weakness among shipbuilders, banks and technology companies dragged on South Korea's KOSPI, while liquidity concerns weighed on Chinese equities.

Commodities: Nymex crude oil gained 0.89% between 18:00 EDT and 0:00 EDT, last trading at $126.21/bbl. Iran has refused to abandon its nuclear program ahead of the deadline imposed by Western nations, while tensions in Nigeria also continue to support prices. Tropical Storm Edouard has formed in the northern part of the Gulf of Mexico, near a major-oil and gas producing area. The National Hurricane Center has issued a hurricane warning for Louisiana and Texas. Edouard is expected to make landfall on late Tuesday, but most computer models project a mild storm. Spot gold is higher by 0.60%, last trading at $923/oz.