Weaker USD helps boost commodities

*Asian Market Update:* Equities recover on strong Q4 production report
from Rio, DRAM price hike at Elpida; Weaker USD helps boost
commodities

!! Economic Data !!
*- (CH) CHINA DEC ACTUAL FOREIGN DIRECT INVESTMENT (FDI) Y/Y: 15.6% V
38.2% PRIOR; YTD:* 17.4% V 17.7% PRIOR
*- (JP) JAPAN NOV FINAL INDUSTRIAL PRODUCTION M/M: 1.0% V 1.0% PRELIM;
Y/Y: 5.8% V 5.8% PRELIM; CAPACITY UTILIZATION M/M:* 1.6% V -2.3%
PRELIM
*- (JP) JAPAN DEC FINAL MACHINE TOOL ORDERS Y/Y:* 64.0% V 63.5% PRELIM
*- (JP) JAPAN DEC NATIONWIDE DEPT SALES Y/Y: -1.5% V -0.5% PRIOR;
TOKYO DEPARTMENT STORE SALES Y/Y:* -0.3% V +0.3% PRIOR
*- (NZ) NEW ZEALAND DEC NON RESIDENT BOND HOLDINGS:* 62.1% V 60.4%
PRIOR
*- (NZ) NEW ZEALAND DEC REINZ HOUSING PRICE INDEX M/M: -0.6% V 1.9%
PRIOR; Y/Y:* -11.3% V -15.2% PRIOR
*- (KS) SOUTH KOREA DEC DEPARTMENT STORE SALES Y/Y: 11.6% V 10.1%
PRIOR; DISCOUNT STORE SALES Y/Y:* 2.9% V 1.7% PRIOR
*- (UK) UK DEC NATIONWIDE CONSUMER CONFIDENCE:* 53 V 44E (matches
4-month high)
*- (UK) UK DEC RICS HOUSING PRICE BALANCE:* -39.0% V -44.0% PRIOR
(3-month high)

!! Markets Snapshot (as Of 12:00amET) !!
- Nikkei225 +0.3%
- S&P/ASX +0.8%
- Kospi +0.5%
- Taiex +0.8%
- Shanghai Composite +0.2%
- Hang Seng +0.8%
- Mar S&P Futures +0.2% at 1,287
- Mar Gold +0.2% $1,364/oz
- Feb Crude oil +0.2% $91.16/brl
- Mar Copper +0.6% at $4.41

!! FX USD Majors Session Range !!
*- EUR/USD:* 1.3250-1.3320
*- GBP/USD:* 1.5880-1.5940
*- USD/CHF:* 0.9600-0.9655
*- USD/CAD:* 0.9855-0.9885
*- AUD/USD:* 0.9895-0.9945
*- NZD/USD:* 0.7700-0.7735
*- USD/JPY:* 82.50-82.75

!! Overview/Top Headlines !!
- Asian equity markets are staging a rebound following overnight
decline in the wake of a RRR rate hike on Friday.
*Shanghai Composite is particularly impressive, falling nearly 1% in
the first hour following a 3% drop yesterday before eking out modest
gains with two hours to go.* Bullish production reports and positive
sentiment among the top global miners has helped renew some of the
risk appetite across the asset classes. *Rio Tinto reported Q4 iron
ore output up 6% y/y at 50.1M tons and FY output up 8.6% at 184.6M
tons.* The company did note the Force Majeure is still in effect in
Queensland, and had neither monetary estimates of damage nor a
timeline when it may be lifted.

Fortescue Metals also posted a quarterly production increase on an
annual basis, mining 9.9M tons of iron ore or +9% y/y. Lastly, the
world's top iron ore miner *Vale forecasted it would boost its iron
ore production +50% by 2015 to 450M tons, forecasting demand to remain
high and maintaining a "Very, very" bullish outlook on China steel
growth.* Separately in China, a local press report suggested *China
govt will aim to restrict 2011 new yuan loans around CNY7.2T-7.5T* -
short of CNY7.95T final figure as well as the CNY7.5T official target
for 2010.

- In currencies, risk appetite evident in equities helped European and
commodity majors regain some ground against the greenback. EUR/USD has
shrugged the uncertainly concerning the rumors EU Fin Min are
discussing expanded EFSF facility, finding buying interest around
$1.3250 on two separate occasions in the US and Asia session. Cable
outperformed both the dollar and the Euro, boosted by strong Dec
consumer confidence and Housing price economic data. Dollar weakness
also translated into some relative Yen strength, with USD/JPY falling
to 1-week low in US hours as 10-yr Treasury yields retreated below
3.30%. In commodities, weaker dollar and strong production data from
miners boosted copper by nearly 1% above $4.40.

!! Speakers/Geopolitical/In The Press !!
*- (CH) Increasing number of hedge funds are starting to consider
corporate CDS and other data in anticipating the bursting of China
realestate bubble - London Telegraph*
*- (CH) China Commerce Ministry (MOFCOM):* Foreign trade in 2011 is
facing a slow global economic recovery; Could also be a rise in trade
friction
*- (EU) PIMCO's El-Erian: Probability of success in resolving EU
crisis with more debt, as evidenced by discussion of expanding EFSF,
is very low - FT op/ed*
*- (EU) EU's Rehn:* There will be more rigorous bank stress tests in
the coming months that will guide bank restructurings
*- (EU) EU's Juncker:* Euro as such does not have a problem; Crisis
has struck some Eurozone countries but not the Euro; EU Fin Mins not
considering broader scope for EFSF
*- (KS) Korea Chamber of Commerce and Industry:* Korea's property
market to continue to slow in 2011 due to BOK tightening and lower
demand from the public sector - Korean press
- (AU) According to ANZ Group analysts, up to A$20B (1.5% of GDP) may
be needed to recover from Queensland flooding - The Australian
- (US) According to PIMCO website data, its US treasury bond holdings
fell to 22% from 30% in November (lowest level last month since Feb
2009) - US Financial Press

!! Equities !!
*- Apple Board grants Steve Jobs a medical leave of absence at his
request*
*- Elpida:* Increasing DRAM prices for PCs by 10% as early as this
month; Looking for price hikes to take effect with February-March
shipments - Nikkei News
- NAND flash prices +1%-5% in first half of Jan v second half of Dec -
DigiTimes citing DRAMeXchange
*- TM:* Toyota Motor Workers' Union to hold off on asking for wage
hikes for 2nd consecutive year - Nikkei News
*- TDK Corp:* May post Q3 Op profit of about ¥17B, +40% y/y; Sales
may rise to ¥220B, +4% y/y; Likely to maintain FY10/11 guidance -
Nikkei
*- CAJ:* President: Global product demand to remain strong in 2011-
Nikkei News interview
*- Nippon Steel:* FY10/11 pretax profit for Nippon Steel may fall
short of ¥250B target by about ¥30B; JFE Holdings may also miss
targets - Nikkei News
*- Nippon Express:* May post Q3 Op profit ¥12B v ¥12.2B y/y - Nikkei
News
*- Bank of China:* 3988.HK: Plans to raise $350M (over CNY2.3B) as
part of China's bigger push to internationalize CNY; No indication
when equity raise would occur - South China Morning Post
- (HK) According to Macau Gaming Inspection, casino revenues from the
VIP segment rose to 40.5B patacas vs 25.0B y/y - South China Morning
Post
- (AU) Australia's banking sector likely to be hit by the impact of
Queensland flooding on expected rise in debt defaults and payment
deferrals - The Australian

!! FX/Fixed Income/Commodities !!
- (CH) PBoC sets yuan mid point at 6.5891 v 6.5930 prior close (new
high setting for Yuan since 2005 revaluation)
- (CH) China's Anshan Iron & Steel will raise prices by CNY300/ton for
Feb. delivery - Chinese Press
*- JGB:* Japan's MoF sells ¥2.2T in 5-yr 0.5% (0.5% prior) JGBs; Bid
to cover 3.97x v 2.78x prior
- (AU) Australia Queensland coal mines are estimated to have lost a
total of A$2.3B from the flooding - Australian Financial Review
Source: Fxstreet.com