USD/JPY retreats as BOJ minutes further reveal division on expanded easing

Economic Data

- (JP) JAPAN CABINET OFFICE (GOVT) NOV MONTHLY ECONOMIC REPORT: maintains overall economic assessment of seeing soft spots spreading in the current moderate recovery

- (JP) JAPAN OCT PPI SERVICES Y/Y: 3.6% V 3.6%E

- (CN) CHINA OCT CONFERENCE BOARD LEADING ECONOMIC INDEX M/M: 0.9% V 1.0% PRIOR (7th consecutive increase)

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 114.3 v 113.0 prior

- (NZ) NEW ZEALAND Q4 TWO-YEAR INFLATION EXPECTATION: 2.06% (6-quarter low) V 2.23% PRIOR; Median fell to 2.00% from 2.20%

- (SG) SINGAPORE Q3 FINAL GDP Q/Q: 3.1% V 1.5%E; Y/Y: 2.8% V 2.5%E

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.4%, S&P/ASX -0.7%, Kospi -0.1%, Shanghai Composite +0.7%, Hang Seng -0.1%, Dec S&P500 -0.1% at 2,065

Commodities/Fixed Income

- Dec gold +0.3% at $1,200, Jan crude oil -0.1% at $75.70/brl, Dec copper +0.3% at $3.01/lb

- SLV: iShares Silver Trust ETF daily holdings fall to 10,822 tonnes from 10,864 tonnes prior

- (CN) PBoC to drain CNY5B in 14-day repos (33rd consecutive drain, smallest drain since May 2013); Offer yield at 3.2% v 3.4% prior (4th yield cut, prior offer yield cut by 10bps to 3.4% from 3.5% on Oct 13th)

- (JP) BOJ offers to buy ¥550B in 1-3yr JGBs, ¥550B in 3-5yr JGBs, and ¥20B in inflation-indexed bonds

- (AU) Australia MoF (AOFM) sells A$200M in 1.25% 2022 indexed notes; avg yield: 0.7445%; bid-to-cover: 5.1x

Market Focal Points/Key Themes/FX

- The meeting minutes from the controversial Oct 31st BOJ decision marked the key USD/JPY risk event, as the pair first hit session highs above 118.50 before falling below 117.80. Recall the decision to expand QE to ¥80T from ¥60-70T was already a near even 5-4 split. Today's decision revealed that several policymakers also feared some of the "side effects" of more easing, and that they expressed some doubt over the impact of such a move. This would only reinforce the depth of the split in the policy committee, suggesting the dissenter camp is well-entrenched in its position not to take up a more aggressive approach. Separately in Japan, the Cabinet Office November report maintained overall economic assessment, but lowered its view on the Employment segment for the first time in 2 years to state improvement in labor has paused. Econ Min Amari was more upbeat, noting wage gains are starting to reflect improved profitability at companies. BOJ Gov Kuroda largely reiterated his rhetoric that domestic economy continues moderate recovery and core CPI would meet the 2% inflation target in or around FY15.

- In China, PBoC's latest easing move on Friday has been supplemented by additional liquidity injections. PBoC 14-day repo operations saw the smallest drain in 4 months, and also lowered the offering yield by another 20bps to 3.2% - the 4th instance of lower yield in open-market operations. China Oct Conference Board Leading Index rose for the 7th consecutive month, but resident economist noted reductions in consumer expectations, adding the Coincident Economic Index (CEI) registered zero growth for the first time since January 2014.

- The controversial high-profile Grand Jury verdict out of Ferguson, Missouri did NOT find the evidence to indict police officer Darren Wilson in the shooting of teenager Michael Brown sufficiently compelling. Violence, looting, gunfire, and tear gas marked the immediate aftermath on location, as President Obama announced the Grand Jury decision needs to be accepted even though he understood the disagreement and anger that it may produce. US equity futures were down about 3 handles or 0.1% in the wake of the announcement.

Equities

US markets:

- QIHU: Reports Q3 $0.63 v $0.62e, R$376.4M v $363Me; flat afterhours

- PANW: Reports Q1 $0.15 v $0.12e, R$192.3M v $181Me; -1.3% afterhours

- BRCD: Reports Q4 $0.24 v $0.23e, R$564.4M v $563Me; -2.1% afterhours

- WDAY: Reports Q3 -$0.03 v -$0.10e, R$215M v $205Me; -7.8% afterhours

- POST: Reports Q4 $0.13 v $0.08e, R$1.04B v $980Me; -8.7% afterhours

Notable movers by sector:

- Consumer Discretionary: Retail Food Group RFG.AU +1.5% (affirms FY15 guidance)

- Financials: OzForex Group OFX.AU +9.3% (H1 results)

- Energy: China Resources Gas Group 1193.HK +3.1% (analyst action)

- Industrials: Sufa Technology Industry 000777.HK +5.2%, Shenzhen Woer Heat-Shrinkable Material 002130.CN +2.7%, Dongfang Electric Corp 1072.HK +1.5% (China may merge three nuclear operators' overseas business); China Communications Construction 601800.CN +4.1% (to issue preferred shares); NRW Holdings NWH.AU -16.8% (guides FY15 lower); Takata Corp 7312.JP +14.2% (Transport Min sees actual recalls well below eligible totals)

- Technology: FIH Mobile 2038.HK +3.5% (positive profit alert); Sony Corp 6758.JP +4.8% (sets FY17 targets)