SheldonThinks Forum

Core machine orders in Japan jumped 2.9 percent on month in September, the Cabinet Office said on Thursday - worth 831.6 billion yen. The headline figure topped forecasts for a decline of 1.0 percent but down from the 4.7 percent increase in August. On a yearly basis, core machine orders jumped 7.3 percent - also blowing away forecasts for a decline of 0.3 percent following the 3.3 percent jump in the previous month. The total number of machinery orders, including those volatile ones for ships and from electric power companies, jumped 8.0 percent on month but fell 2.4 percent on year Manufacturing orders climbed 12.0 percent on month and 13.4 percent on year to 363.7 billion yen in September, while non-manufacturing orders added 1.7 percent on month and 3.5 percent on year to 478.3 billion yen. Government orders surged 21.0 percent on month but plummeted 28.5 percent on year to 256.5 billion yen. Orders from overseas lost 9.4 percent on month and 4.7 percent on year to 955.2 billion yen. Orders from agencies added 2.5 percent on month and 10.0 percent on year to 105.3 billion yen. For the third quarter of 2014, core machine orders advanced 5.6 percent on quarter and 2.4 percent on year to 2,411.0 billion yen. Total machine orders dropped 14.9 percent on quarter and added 0.7 percent on year to 6,678.5 billion yen. For the fourth quarter of 2014, core machine orders are forecast to have fallen 0.3 percent on quarter and added 1.6 percent on year to 2,404.9 billion yen. Also on Thursday, the Bank of Japan said that its index measuring domestic corporate service prices in Japan was down 0.8 percent on month in October, standing at 105.5. That missed forecasts for a decline of 0.4 percent following the upwardly revised flat reading in September (originally -0.1 percent). On a yearly basis, prices advanced 2.9 percent - also below expectations for an increase of 3.3 percent following the 3.6 percent gain in the previous month. Export prices were down 0.6 percent on month and 1.7 percent on year, the data showed, while import prices tumbled 1.6 percent on month and 2.8 percent on year.

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Mislav Matejka JPMorgan global equity strategist at CNBC: 

It's time to start buying Europe.

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The price of purchasing new capital items rose 0.5 percent in the third quarter of 2014, Statistics New Zealand said on Thursday. Four of six asset groups measured by the capital goods price index rose. The major upward contributions to the CGPI came from higher prices for residential buildings (up 1.0 percent) and non-residential buildings (up 0.8 percent). The gains were offset by a fall in transport equipment prices (down 0.6 percent). On a yearly basis, the CGPI climbed 2.3 percent. The increases for residential buildings (up 4.7 percent) and non-residential buildings (up 4.1 percent) were the main contributors to the change.

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Bank of China plans to double its mortgage lending in Australia in two years: Wants to offer more home loans to locals Hopes to reach more non-Chinese borrowers in the country through a product distribution agreement with Australian Finance Group Pty, Australia's biggest mortgage broker Bank of China held A$672 million of Australian mortgages as of September 30

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South Korea posted an unadjusted current account surplus of $9.01 billion in October, the Bank of Korea said on Thursday. That follows the upwardly revised $7.41 billion surplus in September (originally $7.20 billion). The goods account surplus widened to $8.86 billion, from $7.51 billion the previous month. The services account deficit registered $0.25 billion, similar to September's level. The primary income account surplus widened to $0.97 billion from $0.61 billion the previous month due to a decrease in payments on the equity account. The secondary income account saw a deficit of $0.36 billion. The financial account saw a net outflow of $6.80 billion, down from $8.76 billion in the previous month. Direct investment recorded a net outflow of $2.09 billion, less than the $2.15 billion in the previous month, as foreigners' direct inward investment increased. Portfolio investment saw a net outflow of $0.38 billion, down from $3.52 billion in September, due to the reduction of residents' outward portfolio investment and the shift to a net inflow of foreigners' portfolio investment, the bank said. Financial derivatives posted a net outflow of $0.57 billion. Other investment saw a net outflow of $4.01 billion, up from $1.88 billion a month earlier - despite the shift to net borrowings by domestic financial institutions, as overseas loans and deposits by domestic financial institutions increased, the bank noted. Reserve assets fell $0.25 billion. Seasonally adjusted, the current account surplus was $7.32 billion, up from the downwardly revised $4.99 billion (originally $5.20 billion).

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There is a consensus call that the RBI will cut rates by 25bps as inflation is on track to significantly undershoot its target for the year. Moreover, falling global oil prices will put further downward pressure on inflation readings in the near term. "We would expect G-Sec and equity prices to rise while INR OIS rates to fall after such decision. As a rate cut would improve growth outlook and bring in portfolio capital inflows, the INR should react positively", quoted Credit Agricole in a report to its clients.

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Aus Retail Sales has surprised to the upside and pushedAUD/USD above 0.8420 Hourly resistance is at 0.8430 with break targeting 0.8470 Aus trade numbers also came in a bit better and the market is short 

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Spot gold had slipped 0.2 percent to $1,200.26 an ounce by 0036 GMT.  Gold jumped more than 1 percent on Monday on a brief surge of late-day technical buying as it breached the $1,200-per-ounce level long after the U.S. dollar dropped from a more than five-year high.  But the dollar recovered on Tuesday and was higher against a basket of major currencies.  Strong US data and higher rates could provide a further boost to the dollar and hurt non-interest-bearing bullion. 

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Protests for min wage increase ongoing in Jakarta, peaceful so far  Risk fall, global stocks dump, strong corporate year-end USD demand pressure IDR  USD/IDR to move back above 12350, resistance zone between 12380-12400  NDFs traded 12420-12445 overnight, closed at 12435-12450 in NY  No change in BI policy rates expected, currently at 7.75% 

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The services sector in New Zealand continued to expand in November, albeit at a slower pace, the latest survey from Business NZ revealed on Monday with a PMI of 54.8. That's down from 57.0 in October, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. By region, the index for the Northern region came in at 55.5, while the Central region was at 57.1, Canterbury was at 56.8 and Otago came in at 65.3.

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Japan posted a merchandise trade deficit of 891.859 billion yen in November, the Ministry of Finance said on Wednesday - remaining in the red for the 29th consecutive month. The headline figure beat forecasts for a shortfall of 992.0 billion following the downwardly revised 736.9 billion yen deficit in October (originally 709.995 billion yen). Exports were up 4.9 percent to 6.188 trillion yen - well shy of forecasts for a gain of 7.0 percent and slowing from 9.6 percent in the previous month. Exports to all of Asia were up 5.8 percent on year, while exports to China added an annual 0.9 percent. Exports to the United States gained 6.8 percent on year, while exports to the European Union fell an annual 1.3 percent. Imports dipped 1.7 percent on year to 7.080 trillion yen versus forecasts for an increase of 1.7 percent following the upwardly revised 3.1 percent gain a month earlier (originally 2.7 percent). Imports from all of Asia climbed 3.4 percent on year, while imports from China alone advanced an annual 3.9 percent. Imports from the United States tumbled 3.3 percent, while imports from the European Union collected 2.4 percent. The adjusted merchandise trade balance was a deficit of 925.0 billion yen, which beat forecasts for a shortfall of 982.8 billion yen following the revised 985.1 billion yen deficit in October (originally -977.5 billion yen).

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Standard Chartered TF analysis shows bullish flow signal for MYR and KRW suggesting JPY-KRW rebound: G10: Corporates turned small sellers of USD vs. EUR in November; custodians reduced USD-JPY buying Asia: SCTF Aggregate Position Index shows that our clients reduced shorts in USD-KRW and USD-TWD Africa: SCTF Corporate Position Index shows that our clients increased USD-NGN longs

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In terms of data, this week will provide further evidence of our lowflation scenario, notes Societe Generale Research: With lower fuel prices, HICP inflation is set to print three ticks lower at just 0.0% yoy. Risks are tilted to the downside and the HICP is set to slide into negative territory in the coming months. Meanwhile, core inflation should marginally increase from 0.7% yoy to 0.8% yoy. Despite the positives arising from the lower euro and weaker oil prices, PMIs and the EC surveys should continue to point to low growth and inflation.  December final euro-area PMIs are likely to be unchanged from the flash estimate in the services sector, with meaningful improvements expected both in Spain and Italy.  Industrial production in November is set to continue to reflect a weak and uneven recovery across the region, with German output probably down by 0.4% momand French output probably rising by 0.7% mom.

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Retail prices in the United Kingdom were down a seasonally adjusted 1.7 percent on year in December, the British Retail Consortium said on Wednesday. That beat forecasts for a decline of 1.8 percent following the 1.9 percent fall in November. Food prices were up 0.1 percent after falling 0.2 percent in November - the first such decline in the history of the series. Non-food prices dropped 2.8 percent in December after falling 2.9 percent in November. Shop prices were down every month in 2014, and have declined in 20 consecutive months overall. "A number of key commodities in the retail supply chain, in particular oil, have fallen dramatically recently and the impact of these falls will continue to make its way through to shop prices for some time to come," said Helen Dickinson, BRC director general.

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The rebound in risk sentiment extended through the North American session, with US equities up 1.8% and US 10yr yields back above 2.00%.  Commodity prices have been stable. The more positive risk tone is partly reflected in FX market, with JPY underperforming (USDJPY testing 120) and NOK, AUD, NZD outperforming, although better domestic data in those regions in recent days have helped.  EUR continues to be heavy with EURUSD making new lows and now near 9-year low.  Draghi remarks that ECB measures may include sovereign-bond buying got quite a few headlines, although is not surprising at this point 

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The U.S. dollar strengthened against the other major currencies in the Asian session on Tuesday. The greenback rose to near a 2-week high of 1.5056 against the pound, a 1-week high of 118.30 against the yen and a 5-day high of 0.8797 against the Swiss franc, from yesterday's closing quotes of 1.5109, 117.53 and 0.8786, respectively. Moving away from an early 5-day low of 1.1931 against the Canadian dollar, the greenback edged up to 1.1971. Against the euro, the greenback edged up to 1.1572 from yesterday's closing value of 1.1600. If the greenback extends its uptrend, it is likely to find resistance around 1.49 against the pound, 120.08 against the yen, 1.02 against the Swiss franc, 1.20 against the loonie and 1.14 against the euro.

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Spot gold fell 0.2 percent to $1,291 an ounce by 0027 GMT.  The metal reached $1,305, its highest since August, on Wednesday.  After a quick climb of about 9 percent this month, traders are adjusting positions ahead of the ECB policy meet.  The metal has rallied on safe-haven bids from political and economic uncertainties in Europe, along with concerns over the health of the global economy.  The ECB is poised to announce a plan on Thursday to buy government bonds, resorting to its last big policy tool for breathing life into the flagging euro zone economy and fending off deflation.

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Fall in commodities/ minerals ps to impact exports, IDR  BI said no adjustment to policy rate likely till inflation stables  Govt sees Jan CPI 7.5%y/y vs 8.36% in Dec, sees trade balance +USD100mln  IDR NDFs traded 12520-12500 range overnight, closed 12490-12515 in NY

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Consumer prices in Australia were up just 1.7 percent on year in the fourth quarter of 2014, the Australian Bureau of Statistics said on Wednesday. That was below forecasts for 1.8 percent, and down from 2.3 percent in the third quarter. On a quarterly basis, inflation added just 0.2 percent versus forecasts for 0.3 percent and down from 0.5 percent in the previous three months. The Reserve Bank of Australia's trimmed mean was up 0.7 percent on quarter and 2.2 percent on year in Q4, while the weighted median added 0.7 percent on quarter and 2.3 percent on year.
 
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Total private sector credit in Australia was up 0.5 percent on month in December, the Reserve Bank of Australia said on Friday - in line with expectations and unchanged from the previous month. On a yearly basis, credit jumped 5.9 percent - also matching forecasts and unchanged from November. Housing credit added 0.6 percent on month and 7.1 percent on year, while personal credit was flat on month and added 0.9 percent on year and business credit gained 0.5 percent on month and 4.8 percent on year. The M3 money stock advanced 0.7 percent on quarter and 7.7 percent on year.

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