JPY pares declines after Econ Min warned against excessive weakness

Asian Market Update: JPY pares declines after Econ Min warned against excessive weakness; Rio Tinto Q4 output as expected, cost cutting to continue

Economic Data

- (NZ) New Zealand Q4 NZIER Business Opinion: 20 v 8 prior (1-year high)

- (NZ) NEW ZEALAND REINZ DEC HOUSE PRICE INDEX 3,522 V 3,544 PRIOR; M/M: -0.6% V +1.4% PRIOR; HOUSE SALES Y/Y 8.2% V 24.1% PRIOR

- (NZ) NEW ZEALAND DEC FOOD PRICES M/M: -0.2% V -0.8% PRIOR (4th consecutive month of decline)

- (JP) JAPAN DEC MONEY STOCK M2 Y/Y: 2.6% V 2.1%E (highest since Apr 2012); M3 Y/Y: 2.2% V 1.9%E

- (JP) JAPAN DEC BANKRUPTCIES Y/Y: -13.8% V -12.0% PRIOR

- (SG) SINGAPORE NOV RETAIL SALES M/M: -0.8% V 0.5%E; Y/Y: -1.1% V -0.4%E; RETAIL SALES EX AUTO Y/Y: +2.0% V 2.9%E

- (UK) UK DEC RICS HOUSE PRICE BALANCE: 0% V -8%E (highest level since June 2010)

Markets Snapshot (as of 05:00 GMT)

- Nikkei225 +0.8%

- S&P/ASX -0.2%

- Kospi -0.9%

- Shanghai Composite +0.3%

- Hang Seng -0.3%

- Mar S&P500 -0.2% at 1,462

- Feb gold +0.1% at $1,671/oz

- Feb Crude Oil -0.3% at $93.83/brl

Notes/Observations

- Asian equity markets are trading mixed, with a somewhat dovish set of remarks by Fed chairman Bernanke balanced out by risk-off flows back into the Japanese yen following surprising comments from Japan's Economic Minister Amari. Speaking in Tokyo, Amari noted that excessive weakness in JPY would not be good for importers and the economy, sparking an abrupt bout of short-covering in a massive short-JPY positioned market. USD/JPY fell over 100pips from session highs all way way to ¥88.60 while EUR/JPY fell nearly 150pips to ¥118.50 before retracing from those lows. Earlier, BOJ Gov Shirakawa reiterated the central bank would pursue massive easing to support the economy.

- Rio Tinto reported its Q4 iron ore output at 51.9M tons, down from 52.6M from Q3, while annual production was just shy of the 254M ton estimate. Shares traded in Sydney pared the early 1% declines to trade unchanged, as investors noted continued cost-cutting from "unsustainable" levels despite the modest optimism going into 2013. Output of copper rose 20% on the year, while alumina production was up 11%.

- In late US hours, Fed Chairman Bernanke assuaged some of the post FOMC-minutes concerns over the extent of QE policies that saw USD and US govt bonds yields spike last week. In his first interview of the new year, Bernanke said the Fed is not out of ammunition, and that despite the recent improvement in economic data it is still to early to change course. Bernanke also continued to warn over the threat of the debt ceiling after calling the fiscal cliff compromise a "good start."

Currencies/Fixed Income/Commodities

- USD/JPY: Falls about 100 pips to ¥86.60 after Econ Min Amari reiterated that excessive JPY weakness is not positive for economy

- USD/CNY: (CN) PBoC sets yuan mid point at 6.2691 v 6.2192 prior close (highest CNY setting since May 2012)

Speakers/Political/In the Papers

- (CN) China 2013 power consumption may increase by 9-10% - Chinese press

- (CN) According to Shanghai Deovolente Realty Co, Shanghai new home sales last week rose 17.3% to 264.2K sqm; Avg price sold fell 3.3% to CNY20.7K/sqm - Shanghai Daily

- (JP) BoJ Gov Shirakawa: Economy is weakening further; to continue with powerful monetary easing

- (JP) Japan cabinet to approve ¥13.1T supplementary stimulus later today; Budget to rely on govt bonds for half of the funding, raising total govt debt offering to ¥52T in FY12/13 - Nikkei News

- (AU) Survey of 14 economists conducted by Australian press saw median expectations for unemployment rate in Dec rising 0.2pts to 5.4% - Australian press

- (NZ) NZIER chief economist Eaqub: Survey results consistent with 2012 GDP growth of about 2% - NZ press

- (NZ) Infometrics economist: New Zealand card spending data suggesting much of the demand was in durables, consistent with strong housing data; More discretionary consumables spending rose only 0.1% q/q - NZ press

- (US) Treasury: Special debt-limit measures may expire by mid Feb-March - financial press

- (US) UBS fixed income strategist: Today's comments from Fed Chairman Bernanke reinforces expectations of QE program lasting into 2014 - financial press

Equities

- RIO: Reports Q4 Iron ore output 51.9M tons v 52.6M q/q; 2012 Iron ore output 253M tons (record high) v 254Me; Shipments 247M tons (record high) v 239M tons y/y

- LEI.AU: Awarded A$200M pact to construct Esso headquarters - financial press

- TM: Exec: Considering manufacturing Prius models in the US amid strong local demand - financial press

- TM: Regains top spot for world's top selling car maker in 2012; expected to hold top position in 2013 - Japanese press

- NSANY: Prices base models of Leaf electric vehicle at $28.8K vs $34K prior - financial press

- 9201.JP: Japan carriers JAL, ANA cancel domestic flights due to winter conditions - financial press

- Hon Hai 2317.TW: Starts selling 60in LCD TVs through its Taiwan affiliate - Nikkei News

- LULU: Guides Q4 higher to $0.74 v $0.74e, Rev to high end of prior $475-480M range v $489Me, SSS in high single digits, Gross margin running slightly ahead of plan; -6.9% afterhours

- AAPL: Barclays analyst: Reports on cuts to iPhone orders exaggerated - financial press

- AAPL: iPad mini, 4th gen models to be available in China on 18th Jan - financial press

- GM: GM China Pres Socia: To add 400 new dealers in China in 2013 for a total of 4,200 (+10%); Looking to keep up with 8% growth in nation's automotive industry - financial press