USD under pressure as Trump's inauguration address seen as thin on substance

Asia Mid-Session Market Update: Shanghai outperforms after temporary RRR cut for top banks; USD under pressure as Trump's inauguration address seen as thin on substance

Friday US markets on close: Dow +0.5%, S&P500 +0.3%, Nasdaq +0.3%

- Best Sector in S&P500: Financials

- Worst Sector in S&P500: Healthcare

- Biggest gainers: SWKS +13.0%; CF +6.1%; QRVO +4.7%

- Biggest losers: BMY -11.3%; TDG -9.9%; ENDP -4.3%

- At the close: VIX 11.5 (-1.2pts); Treasuries: 2-yr 1.18% (-1bps), 10-yr 2.47% (+1bps), 30-yr 3.05% (+1bps)

Weekend US/EU Corporate Headlines

- BNCN: Reports Q4 $0.43 (adj) v $0.43e, R$69.6M v $77.5Me; To be acquired by Pinnacle Financial Partners in all stock transaction valued at $1.9B deal

- KATE: Reportedly Coach and Kors have expressed interest in Kate Spade - press

- AMZN: Said to have signed contracts with auto parts makers - NY Post

- YHOO: Said to be facing SEC investigation over data breaches and how it disclosed the information to investors - financial press

Politics

- (US) Pres Trump signs executive order related to healthcare, pushing agencies to create more flexibility on compliance with Obamacare (ACA)

- (JP) Japan Cabinet approval rating +4ppts to 55% - Mainichi

- (FR) National Front presidential candidate Le Pen: Brexit will have a domino effect across Europe; have to allow for countries to choose to leave the EU or euro zone

Key economic data:

- (JP) Japan Nov All Industry Activity Index m/m: 0.3% v 0.4%e

- (JP) Japan Q3 survey of senior loan offers: Loan demand from households 8 v 10 prior

- (KR) South Korea Jan First 20-days Exports y/y: +25.0% v +11.6% prior; Imports y/y: +25.9% v +9.4% prior

- (TW) Taiwan Dec Unemployment Rate: 3.8% v 3.8%e

Asia Session Notable Observations, Speakers and Press

- Asian indices open the week mixed and USD is under modest pressure; Analysts citing ongoing disappointment with Pres Trump's lack of detail on his economic objectives during the inaugural address and fear of the new US protectionism. Nikkei225 is the biggest decliner on Yen strength, with USD/JPY falling nearly 100pips below 113.50. Australia markets are weighed by disappointing guidance from Brambles, while Shanghai Composite is helped by Friday PBoC announcement of a temporary RRR cut for top 5 banks to support seasonal funding demands ahead of the Lunar New Year.

- Oil prices saw some early volatility with an upward thrust after comments from Saudi and Russian oil ministers that production cuts by OPEC and non-OPEC members are satisfactory and even ahead of schedule.

- UK press reports that PM May will be the first foreign leader to meet Pres Trump, and the US administration is considering offering UK a bilateral trade deal similar to what it currently has with the EU that allows worker movements and other benefits of minimum regulatory hurdles.

- Japan PM Abe also reportedly working toward a formal meeting with the new US leader; The agenda is said to focus around affirming US commitment to protect disputed Senkaku islands against China aggressions, though the US transition team has also reportedly requested that Fin Min and vice Fin Min of Japan attend; Separately, a Nikkei report notes Japan's top pension fund GPIF is considering increasing investment in US high-yield govt bonds as it reduces holdings of JGBs.

China:

- (CN) China Ministry: employment situation still severe in 2017

- (CN) China 2016 urban unemployment rate 4.02% v 4.05% y/y; Below 4.5% official target - Chinese press

Japan:

- (JP) Japan Chief Cabinet Sec Suga: Seeks to strengthen US/Japan ties further

- (JP) Japan PM Abe said to eye a summit with US Pres Trump in early Feb; Hopes to affirm US commitment to protect disputed Senkaku islands' s US govt is requesting that Japan Fin Min and vice Fin Min are included in the visit - Nikkei

- (US) Japan pension fund GPIF said to consider increasing investment in high-yield US govt bonds - Nikkei

Australia/New Zealand:

- (NZ) New Zealand PM English indicating some form of free trade agreement is still possible despite US pulling out of TPP - NZ press

Asian Equity Indices/Futures (00:00ET)

- Nikkei -1.0%, Hang Seng +0.1%, Shanghai Composite +0.3%, ASX200 -0.8%, Kospi -0.1%

- Equity Futures: S&P500 -0.2%; Nasdaq -0.3%, Dax -0.2%, FTSE100 -0.4%

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.0695-1.0750; JPY 113.45-114.40; AUD 0.7550-0.7580; NZD 0.7160-0.7210; GBP 1.2370-1.2445

- Feb Gold +0.8% at 1,214/oz; Mar Crude Oil -0.2% at $53.14/brl; Mar Copper +1.4% at $2.65/lb

- GLD SPDR Gold Trust ETF daily holdings rise 1.2 tonnes to 809.2 tonnes; 2-week high

- (AU) Australia MoF sells A$500M in 4.5% 2020 bonds; avg yield 2.024$; bid-to-cover 4.48x

- (JP) Bank of Japan (BOJ) offers to buy ¥70B in under 1-yr JGBs; ¥410B in 5-10-yr JGBs

- (KR) South Korea Finance Ministry sells KRW0.8T vs. KRW0.8T indicated in 20-year govt bond; Yield: 2.195% v 2.209% prior

- (CN) PBOC to inject combined CNY40B in 14-day and 28-day reverse repos v CNY110B prior

- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8572 V 6.8693 PRIOR

Asia equities / Notables / movers

- 2323.HK Topsearch International Holdings Ltd : Guides FY16 net profit increase of at least 8x y/y; +12.4%

- 6502.JP Toshiba: Said to face pressure to secure investment from South Korea's KEPCO to preserve multibillion-pound British nuclear power project - FT / Banks said to be looking at investing in chip spin off - Nikkei; +9.7%

- Ruralco RHL.AU: Reports a strong start to FY17, Q1 results higher y/y; +9.1%

- 6198.HK Qingdao Port International: Shares rise over 10% on reports Cosco Shipping plans to increase its stake in the company to 18% - press; +8.8%

- 5423.JP Tokyo Steel Mfg Co: Analysts expect with price hikes since Dec, likely to raise FY; expect share buyback if profits beat - press; +6.9%

- 005930.KR Samsung Electronics: Said that investigation into Galaxy Note 7 fires finds that battery size is to fault - financial press; +1.9%

- 2317.TW Hon Hai: Said to consider building a new $7B display making plant in the US - NYT citing CEO Gou; +0.7%

- 1033.HK Sinopec Yizheng Chemical Fibre : Guides FY16 net loss CNY16.1B v proft CNY24.5M y/y; -1.3%

- 6178.HK Japan Post Holdings Co : Guides FY16 Op profit CNY3.9B, -60.1% y/y; -1.5%

- 2298.HK Cosmo Lady China Holdings Co Ltd: Guides FY16 profit -60% to -50% y/y; -6.3%

- VRL.AU Village Roadshow: Issues trading update for Village Roadshow Theme Parks; -9.4%

- BXB.AU Brambles: Guides H1 underlying Net ~3% y/y; Rev ~5% y/y; -15.8%