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Japan Has Y891.859B Trade Deficit



Japan posted a merchandise trade deficit of 891.859 billion yen in November, the Ministry of Finance said on Wednesday - remaining in the red for the 29th consecutive month. The headline figure beat forecasts for a shortfall of 992.0 billion following the downwardly revised 736.9 billion yen deficit in October (originally 709.995 billion yen). Exports were up 4.9 percent to 6.188 trillion yen - well shy of forecasts for a gain of 7.0 percent and slowing from 9.6 percent in the previous month. Exports to all of Asia were up 5.8 percent on year, while exports to China added an annual 0.9 percent. Exports to the United States gained 6.8 percent on year, while exports to the European Union fell an annual 1.3 percent. Imports dipped 1.7 percent on year to 7.080 trillion yen versus forecasts for an increase of 1.7 percent following the upwardly revised 3.1 percent gain a month earlier (originally 2.7 percent). Imports from all of Asia climbed 3.4 percent on year, while imports from China alone advanced an annual 3.9 percent. Imports from the United States tumbled 3.3 percent, while imports from the European Union collected 2.4 percent. The adjusted merchandise trade balance was a deficit of 925.0 billion yen, which beat forecasts for a shortfall of 982.8 billion yen following the revised 985.1 billion yen deficit in October (originally -977.5 billion yen).

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Boj Unlikely to Move at Its Last Policy Meeting of 2014



The Bank of Japan (BoJ) will hold its final monetary policy meeting of 2014 on 18-19 December. Standard Chartered Research notes it does not expect any change in their policy in near term: We expect no policy change, with the BoJ likely to keep its annual asset purchase target at JPY 80tn. The board is also likely to keep its economic assessment unchanged, saying that the economy continues to recover moderately. The BoJ unexpectedly expanded its monetary easing programme on 31 October in order to pre-empt the return of a deflationary mindset. However, the decision was made by a 5-4 vote. While Governor Kuroda and his two deputies have firmly maintained that the 2% inflation target can be achieved "around" FY15 (year starting in April 2015), some board members have expressed different views.

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Flows Suggest Short-Term Jpy-Krw Rebound



Standard Chartered TF analysis shows bullish flow signal for MYR and KRW suggesting JPY-KRW rebound: G10: Corporates turned small sellers of USD vs. EUR in November; custodians reduced USD-JPY buying Asia: SCTF Aggregate Position Index shows that our clients reduced shorts in USD-KRW and USD-TWD Africa: SCTF Corporate Position Index shows that our clients increased USD-NGN longs

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Usd/idr Likely Rangebound Amid 12430-480



Lower NDFs to weigh on pair but bullish majors pairs to underpin Natural demand for USD onshore, corp int add to support too NDFs traded 12525-12540 range overnight, closed 12520-550 in NY


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Usd/idr to Trade Firmer Bias Above 12450 on renewed Ndfs Buying



Broad USD gains overnight, renewed fall in commodities underpin Unfinished yearend demand from corps to add to support 1 month traded 12530-12560 range overnight, closed 12550-12570 in NY

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Euro Area: Further Evidence of Low Inflation



In terms of data, this week will provide further evidence of our lowflation scenario, notes Societe Generale Research: With lower fuel prices, HICP inflation is set to print three ticks lower at just 0.0% yoy. Risks are tilted to the downside and the HICP is set to slide into negative territory in the coming months. Meanwhile, core inflation should marginally increase from 0.7% yoy to 0.8% yoy. Despite the positives arising from the lower euro and weaker oil prices, PMIs and the EC surveys should continue to point to low growth and inflation. December final euro-area PMIs are likely to be unchanged from the flash estimate in the services sector, with meaningful improvements expected both in Spain and Italy. Industrial production in November is set to continue to reflect a weak and uneven recovery across the region, with German output probably down by 0.4% momand French output probably rising by 0.7% mom.


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Greek Election Raises the Stakes for ECB Qe



Greek elections scheduled for 25 January complicate an already difficult debate over whether, when and how to do sovereign quantitative easing (QE) in the euro area.The European Central Bank (ECB) is "in technical preparations to adjust the size, speed and composition" of policy easing measures "should it become necessary to react to a too-long period of low inflation," according to President Draghi, and an imminent slide into negative inflation suggests now is the time to act. Standard Chartered research notes: Euro-area inflation is set to turn negative, raising the need for sovereign QE Greek default threats look overdone, but designing QE has become more complicated EUR/USD remains vulnerable to diverging US/euro-area policy and political uncertainty. A looser ECB stance and near-term political jitters are likely to further undermine EUR/USD. The US dollar (USD) finished 2014 near its highs for the year, but the consensus on the USD is still bullish and investors remain long. In our view, the USD has room to rally further, benefiting from US economic outperformance and anticipated FOMC policy tightening. Reflecting the divergence in the outlook for US and euro-area policy, on 5 January we lowered our EUR/USD forecasts for 2015 as follows: Q1: to 1.17 (from 1.22); Q2: 1.15 (1.20); Q3: 1.17 (1.22); and Q4: 1.18 (1.24).

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UK Shop Prices Drop 1.7% In December - BRC



Retail prices in the United Kingdom were down a seasonally adjusted 1.7 percent on year in December, the British Retail Consortium said on Wednesday. That beat forecasts for a decline of 1.8 percent following the 1.9 percent fall in November. Food prices were up 0.1 percent after falling 0.2 percent in November - the first such decline in the history of the series. Non-food prices dropped 2.8 percent in December after falling 2.9 percent in November. Shop prices were down every month in 2014, and have declined in 20 consecutive months overall. "A number of key commodities in the retail supply chain, in particular oil, have fallen dramatically recently and the impact of these falls will continue to make its way through to shop prices for some time to come," said Helen Dickinson, BRC director general.

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Gold inched Higher on Thursday Along With An Uptick in Oil Prices, capped by Strong Usd and US Data



Spot gold edged up 0.2 percent to $1,212.63 an ounce by 0045 GMT. The metal fell 0.7 percent in the previous session, ending a three-day winning streak. Prices had climbed to a three-week high on global equities concerns over a Greece exit of the euro zone if a left-wing party that wants to cancel austerity measures wins the Jan. 25 elections. But gold lost some ground on Wednesday as stocks edged up after recent sharp losses and as minutes from the Federal Reserve's policy meeting in December showed the U.S. central bank maintaining the status quo on interest rates. Data on Wednesday also showed the U.S. trade deficit fell to an 11-month low in November as declining crude oil prices curbed the import bill, prompting economists to sharply raise their growth estimates for fourth-quarter growth. Traders were eyeing U.S. payrolls data due later this week for clues about the economy and its potential impact on the Fed's monetary policy. A robust economy could prompt the Fed to raise interest rates soon, dulling demand for non-interest-bearing bullion. For now, investors were eyeing moves in oil prices, which slumped to five-year lows earlier this week. U.S. crude stayed above $48 a barrel on Thursday, holding on to gains in the previous session following an unexpected drop in crude inventories and a positive economic outlook at the world's largest oil consumer the United States.

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Risk Rally Extends Showing mixed Results in Fx



The rebound in risk sentiment extended through the North American session, with US equities up 1.8% and US 10yr yields back above 2.00%. Commodity prices have been stable. The more positive risk tone is partly reflected in FX market, with JPY underperforming (USDJPY testing 120) and NOK, AUD, NZD outperforming, although better domestic data in those regions in recent days have helped. EUR continues to be heavy with EURUSD making new lows and now near 9-year low. Draghi remarks that ECB measures may include sovereign-bond buying got quite a few headlines, although is not surprising at this point


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