ECONOMIC DATA

- (NZ) New Zealand Feb Card Spending m/m: -0.4% v 0.4% (first negative figure since June 2009)

- (UK) UK Feb RICS House Price Balance: 17% v 30%e (6-month low)

- (UK) UK Feb BRC Retail Sales Monitor SSS: 2.2% v -0.7% prior; Total Sales: 4.5% v 1.2% prior

- (AU) Australia FEB NAB Business Conditions: 8 v 3 prior; Business Confidence: 19 v 15 Prior (3-month high)

- (AU) Australia FEB ANZ Job Advertisements m/m: 19.1% v -8.1% prior (multi-year high)

- (KS) South Korea FEB PPI m/m: 0.3% v 0.7% prior; y/y: 2.4% v 2.8% prior (lowest since December)

- (JP) JAPAN JAN PRELIM LEADING INDEX: 97.1 V 96.6E; COINCIDENT INDEX: 99.9 V 99.6E

- (JP) JAPAN FEB PRELIM MACHINE TOOL ORDERS Y/Y: 217.3% V 189.4% PRIOR



- Asian equity markets are trading sideways following robust gains yesterday that were attributed to Friday's strong US jobs data, tracking listless action in Monday Wall St session. Nikkei225 entered the final trading hour around unchanged after falling nearly 0.5% in the first half of the day, with export names weighed by Yen repatriation concerns. S&P/ASX gained 0.3% following a fresh batch of strong economic data, while Shanghai Composite was supported by the property sector to the tune of +0.5%. Korea's Kospi and Taiwan's Taiex were near unchanged, and front-month S&P was down a marginal 0.1%, with US economic calendar thin until Thursday.



SPEAKERS/PRESS

- Strong set of economic data from Australia helped the index reverse opening hour losses. February ANZ Job Advertisements rose 19% - the largest expansion since at least 2004 - as markets eye this Wednesday's Aussie jobs report. NAB business confidence also improved to a 3-month high 19 figure from prior 15, helping Aussie 2-yr govt bond yields reach a 7-week high 4.75% level.



- China's FX regulator SAFE downplayed prior speculation that its reserves may be diversified into gold after IMF signalled it would offer its holdings on the market. SAFE also affirmed its commitment to US Treasury markets as well as stable levels for Yuan following press reports citing PBOC Gov Zhou suggesting that the peg may be lifted as seen in the prior session. SAFE comments that interest rate levels may be relatively high helped the Property Index in Shanghai gain nearly 3%. Moreover, SAFE expressed concerns over hot money disguised in trade and FDI inflows, forecasting export levels to continue rising in 2010. PBOC Vice Gov Su reiterated its commitment to accommodative "relatively loose" policy for the rest of 2010, also noting that current liquidity levels are sufficient for further gains in Chinese equities.



- Stateside, NY Fed official Brian Sack suggested that balance sheet will shrink in a "gradual and passive" manner. Moreover, he allowed for possibility that excess reserves drain may not see the balance sheet reach pre-crisis levels, with the system functioning smoothly despite the bloated asset levels.



EQUITIES

- In individual shares, Toyota's defense against allegations of electrical design flaw was dented by today's instance of a Prius driver losing control of acceleration on a California freeway, pushing the speed of the vehicle to 90mph requiring police assistance. Also in the auto sector, Nikkei News reported that Honda's operating profit from North America operations may rise 150% in current fiscal year, and Mazda was said to implement a brake override system in all of its new models. Separately, Mitsubishi Motor signed an agreement to supply 100K electric vehicles to Peugeot, and Hyundai Motor was said to have met with Germany's BASF regarding commercialisation of their co-developed light vehicle technology. Japanese press also cited an official from China Association of Automobile Manufacturers forecasting a slower pace of China new vehicle sales than 46% seen in 2009 - estimating a natural annual growth rate of 10-15% without govt auto-related stimulus policies. Outside the auto space, Hyundai Heavy forecasted slow recovery in orders going forward, and the recent Taiwan earthquake was said to result in shortages for the LCD market.



CURRENCIES/FIXED INCOME/COMMODITIES

- In currencies, European and commodity majors largely consolidated a downward retreat seen in the US hours. EUR/USD ranged around 1.3605-35 and AUD/USD struggled to regain 0.91 despite the strong economic data and higher short-term govt yields. Sterling emerged as the biggest loser of the session following a Moody's warning that the end of the UK government's bank bailout plan could impact banks' bond ratings. A 6-month low in RICS house prices in the month of February also weighed on cable, with GBP/USD briefly testing the downside of 1.50 and EUR/GBP rising to 0.9075. Japanese Yen was slightly firmer as concerns over seasonal strength from repatriation by multinationals overpowered speculation the Yen would replace the greenback as the carry trade funding source. USD/JPY briefly fell below 90.00, retreating from 100-day MA just above 90.50.



- Spot Gold prices are lower and trading near $1,120/oz, after the metal dropped by over 0.90% in NY trading. The NY session declines in gold prices were attributed to less concerns related to Greece, as XAU/EUR led the selling in spot gold. On today's session, China's foreign exchange regulator, SAFE, said gold reserves are unlikely to be the main channel for the country's fx reserves investment. SAFE noted that there were challenges to China adding to its gold holdings, including the fact that prices would rise if China purchased the metal. Also, SAFE said the long-term investment yield on gold is not good. Ahead of today's comments out of China, there was speculation that the country could seek to buy the remaining 191 tons of gold that the IMF is planning to sell. Back in late Feb, the World Gold Council (WGC) said that China was not a realistic candidate to buy gold from the IMF, as the country is the world's largest gold producer. According to the World Gold Council, China is more likely to buy local gold production to add to its reserves. Additionally, in early Jan, the head of China's sovereign wealth fund (CIC) said China must not rush to buy gold due to high prices.



-Crude oil prices are lower by more than 0.30% and trading below $82/bbl. Later today, the weekly US API petroleum inventories data will be released. Shanghai Copper prices are marginally lower, tracking the losses in the euro against the dollar. Later this week, China will disclose various pieces of economic data for Feb (including industrial production and trade balance), which are seen as being key event risks for the copper market.

www.tradethenews.com