ECONOMIC DATA

- (NZ) New Zealand Feb QV House Prices Y/Y: 5.5% v 4.4% prior (5th consecutive month of increase, highest since March of 2008)

- (NZ) New Zealand Q4 Manufacturing Activity: 0.7% v -5.1% prior (first increase since Q3 of 2008)

- (JP) JAPAN JAN CURRENT ACCOUNT TOTAL: ¥899.8B V ¥784BE (9-month low); ADJUSTED: ¥1.71B V ¥1.25BE (7-month high); TRADE BALANCE: ¥197B V ¥153BE (9-month low)

- (JP) Japan Jan Bank Lending y/y: -1.5% v -1.7%e; Bank Lending Banks y/y: -1.6% v -1.7% prior; Bank Lending Banks Adjust y/y: -1.3% v -1.4% prior

- (JP) JAPAN FEB M2: 2.7% V 2.8%E; M3: 2.0% V 2.0%E

- (JP) Japan FEB Bankruptcies y/y: -17.3% v -21.8% prior

- (JP) Japan FEB Eco Watchers Survey Current: 42.1 v 40.1e; Outlook: 44.8 v 41.9 prior



- Asian equity markets have extended the rally from the final trading session of last week, also benefiting from overall surge in risk appetite following better than expected US jobs report on Friday as well as some positive regional economic data. Nikkei225 is leading the way once again with a 2% gain, as weak Yen continues to support export heavy markets. Most recent trade balance from Japan is boosting the perception of strong external demand, with export levels rising 9% m/m and over 40% y/y. Sydney's S&P/ASX finished up 0.9%, Taiwan's Taiex was up 1.3%, Korea's Kospi gained 1.5%, and Shanghai Composite lagged picked up 0.9%, lagging slightly on currency concerns. Ahead of the Monday open on Wall St., front-month S&Ps are at session's best levels, up 0.2% at 1,138.



SPEAKERS/PRESS

- In notable speakers, Japan's Finance Minister Kan warned that despite the string of improving economic data, it is still too soon to end fiscal stimulus support or to be optimistic about the economy. A research report from BofA/ML also pointed to tomorrow's preliminary machine tool order data as a leading indicator that could see some deceleration indicative of "deindustrialization" in the economy. Regarding the outlook for further liquidity from the central bank speculated by the press, the research report offered 3 reasons supporting additional QE, namely the need to reduce interest rates to avoid excessive JGB issuance, a way to address recent Yen strength, and ongoing deflationary threats evident in core price metrics.



- Over in China, central bank governor Zhou was reported to have expressed greater flexibility in terms of revaluing the Yuan. The same FT note also said that no timing for a possible shift in the Yuan has been provided. Separately, China Commerce Minister downplayed revaluation talks, reiterating cabinet positing that yuan reform would be gradual and controlled, and an industry minister forecasted Jan-Feb industrial production at levels comparable to Nov-Dec demonstrating strong y/y momentum. In China-related press, London Times suggested that China leadership may have understated its 2010 GDP growth and inflation forecasts at 8% and 3% respectively, with risks of authorities exiting accommodation too soon.



- Elsewhere in the region, South Korea Fin Min Yoon also retained a somewhat cautious rhetoric, forecasting moderate recovery amid further global uncertainty remaining significant over time. Ahead of this week's Bank of Korea meeting, Yoon said it was too early to raise rates, with asset prices and inflation pressures staying subdued. Over in New Zealand, industry insiders downplayed a strong Feb QV house price print, with QV valuations manager pointing to activity predominantly in the volatile "lower end of the market, driven mostly by first-home buyers". New Zealand Herald also forecasted Reserve Bank of New Zealand remaining on hold this week after a mixed set of economic data in recent weeks.

EQUITIES

- In individual names, Toyota President was expected to meet with Japan's prime minister and transportation secretary, just as the company prepares to defend itself against allegations of electronic failure/design flaw in its control systems. In Korea, Hyundai Heavy reported a $2B order from Saudi Arabia, and Daewoo Shipbuilding was said to have received a wind turbine contract in Texas. In Australia, Arrow Energy announced a non-binding proposal from Shell and PetroChina worth at least A$3.3B.



CURRENCIES/FIXED INCOME/COMMODITIES

- In currencies, risk appetite continued to support European and commodity majors at the expense of Japanese Yen and the greenback. USD/JPY and EUR/JPY reached a 2-week high at 90.60 and 123.60 respectively, while AUD/JPY was 30 pips away from a 7-week high of 82.80. EUR/USD and GBP/USD extended the post-NFP positive reversal by 60-70 pips, with the former reaching 1.3690 and the latter 1.5185. NZD was the best performing commodity currency on a relative basis as AUD/NZD fell back below 1.30 handle. Individually, AUD/USD and NZD/USD reached session highs of 0.9117 and 0.70, up about 40 pips from Friday close for both.

- Crude oil prices are higher and trading above $81.50/bbl, while copper prices are also gaining, as both commodities benefit from the weaker dollar, gains in Asian equities and improvement in risk appetite following Friday's US payrolls data. Spot Gold is little changed and trading near $1,135 per oz.

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