Japan March Manufacturing PMI at 50.4


Link to ForexLive

Posted: 28 Mar 2013 06:48 PM PDT
  • Comes in at 58.2 vs. the flash reading at 58.39
  • February was 60.98, 55.16 in January
Posted: 28 Mar 2013 05:59 PM PDT
  • First expansion reading (>50) since May 2012

Posted: 28 Mar 2013 05:48 PM PDT
  • Japan February preliminary Industrial Production -0.1% m/m (vs. +2.5% expected)
  • Japan February preliminary Industrial Production  -11.0% y/y (vs. -8.5% expected)
  • February CPI -0.7% y/y (vs. -0.7% expected)
  • February core CPI -0.3% y/y (vs. -0.4% expected)
  • February Unemployment rate 4.3% (vs. 4.2% expected)
  • February Household spending +0.8% (vs. +0.1% expected)
More details at Reuters
Posted: 28 Mar 2013 04:45 PM PDT
Japan’s economy minister Amari speaking to reporters in Tokyo
Also:
  • Says the BOJ is independent in choosing means of monetary policy

Posted: 28 Mar 2013 04:10 PM PDT
We’re expecting a quiet session in Tokyo today (famous last words …) on the final day of the 2012 fiscal year.
On Monday we get the release of the BOJ’s March Tankan business survey, and of course Wednesday and Thursday we have the first BOJ policy meeting with Kuroda, Iwata and Nakaso as new head and deputy heads, respectively. The announcement of money-dropping helicopter flights over Tokyo new policies will come on Thursday.
Posted: 28 Mar 2013 04:01 PM PDT
  • USD/JPY has bids on the downside around the 93.80/90 level.
  • Topside has offers around 94.40/50.
  • The year-end yen repatriation that has weighed on USD/JPY and EUR/JPY (amongst other factors, of course) is trickling to an end, as is the fiscal year in Japan.
There is only limited coverage from ForexLive today and Monday, so we may not be able to have these levels updated.
Posted: 28 Mar 2013 03:53 PM PDT
The U.S. said it flew two B-2 stealth bombers on a training run over South Korea on Thursday as part of its war games, a move publicized to demonstrate deterrence as North Korea continues to threaten its neighbors and the U.S.
The North has responded by ordering ‘rocket units’ of its army to standby to fire.
Posted: 28 Mar 2013 03:50 PM PDT
Not everyone shares Abe & Co.’s view that deflation is all about monetary policy – some believe an ageing population is a huge challenge for overcoming deflation in Japan. This article takes a look at Japan’s demographics: Report: 30% of city dwellers will be 65-plus by 2040
A study by the National Institute of Population and Social Security Research estimates that by 2040, about 30 percent of the population will be 65 years or older in all prefectures, with the increase in the senior population most pronounced in urban prefectures.
Posted: 28 Mar 2013 03:46 PM PDT
Kozo Yamamoto, former finance-ministry official and veteran of Japan's LDP interview, in which he gives his views on what he expects from the BOJ next week, Key points:
  • “I have very high expectations”
  •  He believes buying government bonds with longer maturities would be the first thing to do
  • On amounts: “I would buy an additional ¥5 trillion (about $53 billion) a month to bring up the total to around ¥160 trillion to ¥170 trillion (from ¥129.3 trillion as of February)”
  • Interesting view on the exchange rate (my underlining): past data suggests that the yen could weaken to around ¥98 to the dollar and the Nikkei average rise to around 11600 if inflation reaches 2%
On revising the BOJ law:
Any serious debate should wait until after the July upper-house election, where an LDP victory could set the stage for any necessary revisions. In either case, I believe it's important that we build the legal framework for [holding the BOJ accountable for] inflation targeting before the next governor is appointed five years from now.
BOJ Beat: Reflationist Lawmaker Has High Hopes for Bold Easing
Posted: 28 Mar 2013 03:34 PM PDT
Japan’s full 2013 budget is not likely to be passed until May, so this ‘stopgap’ budget is to be voted on to fund government spending from April 1.
(See earlier report for details, but note the amount now is  ¥13.2 trillion).
The lower house of the Diet passed the stopgap budget on Thursday, it is voted on in the upper house today. It is expected to pass.
Posted: 28 Mar 2013 03:29 PM PDT
A report in the Japan Times of Kuroda’s appearance before the upper house of the Diet yesterday.
Kuroda added nothing of significance yesterday (not a criticism, like us he’s waiting for the BOJ policy meeting for decisions to be made), the article is just a recap: Kuroda keeps up rhetoric on deflation
Further report in the South China Morning Post
Posted: 28 Mar 2013 03:25 PM PDT
In response to the flight of Stealth Bombers over South Korea on Thursday.
Newswire reports of KCNA bulletin.
Posted: 28 Mar 2013 01:27 PM PDT

Forex trading headlines from the US session:

  • S&P 500 sets record closing high, up 6 points to 1568.94
  • Chicago PMI 52.4 vs 56.5 exp
  • US Q4 GDP +0.4% vs +0.5% exp
  • Initial jobless claims 357K vs 340K exp
  • Canada Jan GDP +0.2% vs +0.1% exp
  • KC Fed index -5 vs -3 exp
  • Italian polls tight as govt nears impasse
  • US lawmakers urge for China to be designated for trade secret theft
  • OPEC crude output falls to lowest since Oct 2011 – RTRS poll
  • CHF leads, AUD lags
The overarching theme ahead of the long weekend was US dollar weakness. Position squaring and some worries and the slowing pace of the economy were the drivers.
EUR/USD pressed offers in the 1.2840/50 zone but was unable to break through and drifted back to 1.2815.
Cable climbed as high as 1.5201 but offers up to 1.5210 snuffed out the move.
In general, the winners of the past month were the losers today and vice versa. That strongly suggests positions squaring at the end of the quarter with a long weekend looming.
The upbeat close in the S&P 500 will be a positive factor for the general public as they digest the news over the holiday.
Have a great weekend.
Posted: 28 Mar 2013 12:37 PM PDT
ForexLive will have limited coverage tomorrow and Monday so we can all take a little break.

Posted: 28 Mar 2013 12:23 PM PDT
Cable is challenging offers in the 1.5200/10 zone as the week winds down.
Posted: 28 Mar 2013 12:03 PM PDT
The Economist’s Greg Ip interviewed former Central Bank of Cyprus leader Athanasios Orphanides, who explains how Cyprus ended up an international basket case.
On July 11, 2011 there was an explosion that destroyed the power station producing more than half the power supply of the island. It was triggered by 100 or so containers of ammunition stored in the sun for two years next to the power station. The containers were part of a shipment going from Iran to Syria that was intercepted in Cypriot waters after a tip from the U.S. The president took the decision to keep the ammunition. Cyprus did not have a severe recession in 2009 from the global crisis. The slowdown was fairly mild. But after the explosion, the economy was thrown into a recession.
The more important factor was the government’s unwillingness to ask for a Troika bailout earlier in the process. Orphanides said problems were contained but grew as leaders procrastinated.
Posted: 28 Mar 2013 11:19 AM PDT
Napolitano told Bersani he will try to very the conditions for himself and see if a government can be formed.
Bersani added that he’s faced unacceptable preconditions from other parties.
No surprise as Italian politicians have said since election day they won’t be able to work together. The sooner the voters can sort this out, the better.
Posted: 28 Mar 2013 10:49 AM PDT
Friday also marks the end of the first quarter of 2013.
The New Zealand dollar was the best performer in the three-month period, followed by the US dollar. The laggard was the yen.
The NZD/JPY chart ran into some resistance at 80.00 but the break above the 61.8% retracement points to further gains ahead.
NZDJPY quarterly chart
NZDJPY quarterly chart
Posted: 28 Mar 2013 10:08 AM PDT
Strategists at Deutsche Bank say capital controls in Cyprus are a “meaningfully negative” signal for the euro zone. Officials from Cyprus said the controls are likely to last for a month today after saying they would only last 7 days yesterday.
They also cite increasing bank stress in the eurozone due to deposit flight and sovereign stress. Finally, they say Italy appears to be headed toward a second general election.
They target 1.20.
Posted: 28 Mar 2013 09:50 AM PDT
The bond market closes at the top of the hour and I don’t expect much movement from here.

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