Japanese policymakers noncommittal to intervention as Yen rallies late in the day; China Premier not swayed by EU officials request to hasten Yuan appreciation

***ECONOMIC DATA***

- (NZ) New Zealand Oct Building Permits M/M: 11.7% v 5.5% prior

- (JP) Japan Nov Nomura/JMMA Manuf: 52.3 v 54.3 prior (4-month low)

- (JP) Japan Oct Prelim Industrial Production M/M: 0.5% v 2.5%e (lowest since February); Y/Y: -15.1% v -13.4%e (1-yr high)

- (JP) Japan Oct Labor Cash Earnings Y/Y: -1.7% v -1.9%e (10-month high)

- (JP) Japan Oct Vehicle Production: -19.1% v -21.6% prior (smallest decline since Oct 2008)

- (JP) Japan Oct Housing Starts Y/Y: -27.1% v -33.5%e (7-month high); Annualized Starts: 0.762M v 0.705Me (6-month high); Construction Orders Y/Y: -40.1% v -14.0% prior (3-month low)

- (AU) Australia Nov TD Securities Inflation M/M: 0.3% v -0.3% prior (4-month high); Y/Y: 2.1% v 1.2% prior (8-month high)

- (AU) Australia Oct HIA New Home Sales: -6.0% v -4.5% prior (15-month low)

- (AU) Australia Oct Private Sector Credit M/M: 0.0% v 0.2%e; Y/Y: 1.1% v 1.6%e (multi-year low)

- (AU) Australia Q3 Company Operating Profits: -2.1% v 0.0%e (4-month high); Inventories: 0.8% v -1.0%e

- (SI) Singapore Oct M1 Money Supply Y/Y: 22.1% v 20.6% prior; M2: 9.2% v 11.3% prior

- (SI) Singapore Oct Credit Card Billings: S$2.3B v S$2.3B prior; Bad Debts: S$15.7M v S$16.0M prior

- (KS) South Korea Oct Industrial Production M/M: -3.8% v 0.3%e (10-month low); Y/Y: 0.2% v 5.8%e (4-month low); Manufacturing: 0.3% v 11.3% prior (4-month low)

- (KS) Leading Index Y/Y: 11.3% v 10.1% prior (multi-year high)

- (IN) India Q3 GDP Y/Y: 7.9% v 6.3%e



***SPEAKERS/PRESS***

- The panic selling that gripped global equity markets late last week on Dubai credit concerns appears to be receding in the new week's opening session. Friday's biggest casualty in Asia - the financials - is now at the forefront of the reversal, leading regional bourses higher across the board. In Sydney, S&P/ASX closed the day up by 2.8%, helped by multi-month highs in TD securities inflation and corporate profit prints ahead of tomorrow's RBA decision. Nikkei225, Korea's Kospi, and Shanghai Composite are all up about 2.4% in the final hour of Tokyo trading, where economic data has been mixed. Monthly manufacturing saw a second consecutive decline but remained above the contraction threshold of 50. Industrial production was also weak relative to Sept, but continued to improve on y/y basis. Furthermore, labor cash earnings, auto manufacturing, and housing starts saw multi-month high levels. Ahead of the Monday open in the US, front-month S&Ps are well off session highs around 1,098, but still up 0.5% at 1,094.



- In Tokyo, govt officials and central bankers chimed in on the currency and equity markets after a spike in risk aversion boosted the yen to 14-year highs and sank the Nikkei to multi-month lows. Bank of Japan Governor Shirakawa responded to the increasingly more vocal cabinet criticism, stating that he shares govt view that the economy is in moderate deflation, forecasting that price pressure may persist. Shirakawa also noted that the central bank is monitoring Yen levels and impact on business sentiment and acknowledged that FX volatility is hurting companies, but also shifted the responsibility for FX intervention to the govt. In terms of monetary outlook, BOJ governor said that very easy policy would be maintained, warning that growth may briefly slow in the spring as stimulus wanes. Japan's finance minister commentary on intervention prospects was also unclear. Early in the session, local press quoted Fujii suggesting that no FX intervention would take place, however late in the day, Fin Min refuted that report, stating that he never said fx intervention impossible. Government spokesman Hirano announced that PM Hatoyama would meet with BOJ regarding the prospects for extended quantitative easing, just as Deputy PM Kan warned that the extra budget will be above the former estimate of 2.7T.



- Outside Japan, currency topics also dominated talks in China, where European officials met with the cabinet regarding greater convertibility of Yuan. Speaking after the summit, Premier Wen said CNY would remain stable, but promised to improve the exchange rate gradually in the future. Maintaining a cautious outlook, Wen also suggested that the intensity of fiscal stimulus needs to be maintained by both China and EU. In the Chinese press, former PBoC advisor Li Yang said the global economy will take a long time to recover, and an unnamed banking official noted that new bank lending may drop off to CNY6-7T in 2010 vs the expected CNY9.7T for 2009. Elsewhere, RBA's McKibbin spoke ahead of tomorrow's rate decision with a hawkish tone, justifying near-consensus of another 25bp tightening by noting that monetary policy around the world was too loose, fuelling a bubble across asset classes while depreciating the funding currency of the US.



*** EQUITIES ***

- In individual equities, Korea's LG Display gained over 3.5% after being added to Goldman Sachs conviction Buy list and Samsung announced it was on track to exceed 2009 mobile phone sales target of 200M units. Elsewhere in tech, Taiwan's Hon Hai Precision was speculated to be the most likely candidate to buy Nokia's handset plants. In Tokyo auto space, Japanese press reported that Toyota is targeting a near 10% increase in 2010 domestic vehicle sales at 1.5M units vs 1.4M in 2009, and Nissan was said to be working on the development of a lithium ion battery for electric vehicles. Japanese Yen fell to 87.00 vs USD, however the lack of clarity from BOJ and Fin Min Fujii sparked renewed interest in the currency, with USD/JPY falling back to 86.00 handle.



*** CURRENCIES/FIXED INCOME/COMMODITIES ***

- In currencies, receding risk aversion saw traders bidding up European and commodity FX against the dollar. EUR/USD gapped above 1.50, reaching 1.5080 intraday high. Sterling underperformed the Euro but still traded higher by one big figure at its best level, nearly reaching 1.66. Swissy approached parity vs USD but also lost ground to EUR after some verbal intervention by SNB's Roth in response to the cross falling to 1.50 handle. In commodity FX, AUD pared over half of last week's collapse, approaching 0.92, while NZD/USD topped 0.72 after backing away from 100-day MA and 2-month low near 0.70.

- Spot Gold prices are currently little changed and trading around $1,177/oz, as the metal has moved between gains and losses on the session. In terms of physical demand for gold, today's London Times noted that China's gold demand in 2009 might total more than 450 tons vs. 396 tons y/y. China's 2009 gold production is seen at 310 tons (+10% y/y). A separate press report in the Economic Information Daily quoted a Chinese official as saying that the country could use the recent events in Dubai as an opportunity to buy gold and oil assets. Crude oil prices are higher by over 0.50% and trading above $76/bbl, as concerns regarding Dubai's debt levels have eased from last week. Shanghai Copper prices are gaining by more than 1.5%, supported by the weaker dollar and gains in Chinese equities. On Friday's session, the Shanghai Futures Exchange disclosed that copper stockpiles for the week ended 11/27 declined by 6% from the prior week.

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