Asian Market Update: China FX reserves fall to 3-year lows, though decline is less than feared; North Korea irks western world with the launch of long-range rocket


Economic Data

- (CN) CHINA JAN FOREIGN RESERVES: $3.23 V $3.21TE; 3rd month of decline; Lowest in over 3 years

- (JP) JAPAN DEC LABOR CASH EARNINGS Y/Y: 0.1% V 0.7%E; REAL EARNINGS (EX-INFLATION) Y/Y: -0.1% V -0.4% PRIOR

- (JP) JAPAN JAN BANK LENDING (INCL TRUSTS) Y/Y: 2.3% V 2.2% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.4% V 2.2%E

- (JP) JAPAN DEC CURRENT ACCOUNT BALANCE: ¥961B V ¥1.05TE; ADJUSTED CURRENT ACCOUNT: ¥1.64T V ¥1.59TE; TRADE BALANCE: ¥188.7B V +¥305BE

- (AU) AUSTRALIA JAN ANZ JOB ADVERTISEMENTS M/M: +1.0% V -0.1% PRIOR

- (HK) Macau China visitors 58.8K, +2.6% y/y, Hong Kong China visitor 62.8K on Feb 7th


Index Snapshot (as of 03:30 GMT)

- Nikkei225 -0.2%, S&P/ASX -0.2%, Kospi closed, Shanghai Composite closed, Hang Seng closed, Mar S&P500 +0.2% at 1,878


Commodities/Fixed Income

- Apr gold -0.2% at $1,166/oz, Mar crude oil flat at $30.98/brl, Mar copper -0.4% at $2.09/lb

- (CN) China Dec oil demand fell 0.8% y/y to 11.35M bpd; 2015 oil demand in the country expanded by 5.8% - Platts

- (SA) Saudi Oil Minister al-Naimi met with Venezuela minister on Sunday; No announcement of plans of any production cuts - financial press

- GLD: SPDR Gold Trust ETF daily holdings rise 4.9 tonnes to 698.5 tonnes; highest since Oct 15th; 5th straight increase

- (CN) PBoC injected CNY110B in 14-day reverse repos; Offer yield at 2.40%, unchanged from prior

- (AU) Australia MoF (AOFM) sells A$500M in 2029 Bonds; avg yield: 2.829%; bid-to-cover: 2.95x


Market Focal Points/FX

- Asia is treading water and volatility is lukewarm as China and other regional indices begin a week-long celebration of the Lunar New Year. Nikkei225 was down marginally early on even though USD/JPY was up some 60pips from opening lows above 117.30, testing the highs seen after the sound non-farm payrolls data out of the US on Friday. Toyota shares are weighing on the market after unimpressive results post-close on Friday. In other USD majors, AUD/USD rose about 40pips above 0.71 and NZD/USD also up about 40pips above 0.6640, reversing some of the broader USD strength on Friday's jobs numbers.

- Although China is closed, the release of January foreign reserves data was closely watched by investors to gauge the extent to which PBoC was forced to prop up the Yuan. Although reserves fell for the 3rd straight month to a 3-year low, the decline of $99.5B was less than the record high $107.9B in Dec and should ease some worries. Mizuho economists said the smaller decline suggests that some capital outflow restrictions imposed in January worked while anticipating another benign figure in Feb, while IHS said "the rapid pace of depletion in recent months is simply unsustainable" forcing PBoC to eventually capitulate. Note that late last week, Premier Li reiterated that China will not boost its economy via Yuan devaluation and is not at risk of a hard landing as long as it maintains its reform goals.

- North Korea was also in the headlines over the weekend after snubbing international calls for restraint with a launch of a long-range rocket claimed to take a satellite into orbit. Initial reports over success of the launch were mixed, however South Korea military subsequently acknowledged that North Korea has probably put an object in orbit. UN Security Council convened a meeting about the launch on Sunday in New York condemning the move and may now seek to expand its sanctions on Pyongyang. South Korea and US defense officials also announced they would meet to discuss deploying a US missile defense system on Korean peninsula amid growing threat from the North, which has already been opposed by China foreign ministry. Saber-rattling on the peninsula continued on Monday when a North Korea patrol boat has intruded on the border with the South and retreated after warning shots were fired by the South.

- Japan economic data were largely mixed, with better than expected bank credit in January and soft headline wage inflation growth. Current account data for January were largely in line, though balance of payments trade was a bit soft. BOJ posted its January board meeting opinion summary when it introduced negative rates, noting the need to reinforce QQE objectives and also disclose its available options for further easing in the future while implementing additional measures so as to sustain credibility. The central bank maintains there is plenty of room for pursuing additional easing, even though analysts question its impact on the health of the JGB market. A report in The Economist this weekened also reflected on the issue, profiling the limits of negative rates as consumers find ways to keep cash out of the banks, thereby damaging the overall financial sector.


Equities

US equities/ADRs:

- NFLX: Media insider speculating Kevin Spacey may leave "House of Cards" as his character may be killed off in Season 4 - NY Post

- CVC: NYC and New York State have continud to object to Altice's $10B takeover plan of Cablevision - financial press

- F: Said to plan to build a new assembly plant in Mexico; Expansion cost estimated at over $1B - financial press

Asia movers on news:

- ANN.AU: Reports H1 Net $69.6M v $87.7M y/y; Rev $784.8M v $847.3M y/y; +6.4%

- BRS.AU: Guides FY16 underlying EBITDA $280-300M; Guides initial FY17 underlying EBITDA excess of A$300M; +3.7%

- JBH.AU: Reports H1 Net A$95.2M v A$88.5M y/y; Rev A$2.12B v $1.97B y/y; -0.2%

- ANZ.AU: ASIC said to be preparing a rate-rigging case against ANZ - Australian press; -2.0%

- TM: Reports Q3 Net ¥628B v ¥615.5Be, Op Profit ¥722.3B v ¥780Be, Rev ¥7.34T v ¥7.27Te; Announces share buyback of 0.74%; -2.5%

- Olympus 7733.JP: Reports 9-month Net ¥42.85B v ¥31.93B y/y, Op Profit ¥73.67B v ¥62.07B y/y, Rev ¥592.94B v ¥550.02B y/y; -6.0%

- RWH.AU: Reports H1 Net A$4.7M, -26% y/y; Names Neil Littlewood as CEO, Effective July 1st; -6.7%

- OFX.AU: Terminates talks with Western Union; Cuts FY16 underlying EBITDA A$35-37M (prior A$38.5-40.5M); -39.8%

Share: Feed news

All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD keeps the bearish vibe above 1.0870

EUR/USD keeps the bearish vibe above 1.0870

The EUR/USD pair trades on a negative note during the early European session on Tuesday. The major pair moves in a narrow range between 1.0866 and 1.0876 as traders prefer to wait on the sidelines ahead of the Federal Reserve's interest rate decision on Wednesday. 

EUR/USD News

USD/JPY recaptures 150.00 and beyond, BoJ's Ueda in focus

USD/JPY recaptures 150.00 and beyond, BoJ's Ueda in focus

USD/JPY extends gains beyond 150.00, as the Japanese Yen stays vulnerable amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate to 0% for the first time since 2007 and abandoned the YCC framework. Ueda's presser awaited. 

USD/JPY News

Gold price hangs near one-week low, looks to Fed decision on Wednesday for fresh impetus

Gold price hangs near one-week low, looks to Fed decision on Wednesday for fresh impetus

Gold price struggles to capitalize on the previous day's bounce from the $2,145 region and oscillates in a range during the Asian session on Tuesday. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside. 

Gold News

Why is the crypto market crashing?

Why is the crypto market crashing?

The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms. 

Read more

Lots of tension ahead of this week's Fed decision

Lots of tension ahead of this week's Fed decision

Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.

Read more

Majors

Cryptocurrencies

Signatures