– Japan Mar Watchers’ Current Index 51.8 Vs Feb 45.9
– Japan Watchers’ Current Index Posts 2nd M/M Rise in Row
– Japan Mar Watchers’ Forward-Looking Index 49.7 Vs Feb 50.1
– Japan Mar Forward-Looking Index Posts 1st Drop in 3 Months
– Japan Govt Upgrades View: Economy Picking Up

TOKYO (MNI) – The Economy Watchers’ Survey index for Japan’s
current climate surged to an eight-month high, buoyed by the pullback in
the yen’s rise, revived subsidies for buying low-emission vehicles and
projects to rebuild the earthquake-battered northeastern areas, Cabinet
Office data released Monday showed.

The current conditions index jumped 5.9 points to 51.8 last month
from 45.9 in February, hitting the highest reading since July 2011, when
the index stood at 52.6. It is also the first time in eight months that
the index has topped the key 50 level.

This led the government to upgrade its assessment, saying that the
economy is “picking up.”

In the previous month’s report, the government said the economy is
“picking up moderately” although that the drag from the relatively
strong yen lingers.

Meanwhile, the forward-looking index, which gauges conditions two
to three months ahead, fell to 49.7 in March from 50.1 in February,
posting the first fall in three months amid uncertainty caused by rising
crude oil prices.

The February level was the highest since 51.9 marked in April 2007.

The watchers’ index gauges whether respondents with jobs most
sensitive to economic conditions — taxi and truck drivers, department
store sales staff as well as restaurant and shop owners — believe
economic conditions have improved or worsened from three months before.

The household sub-index for current conditions rose to 51.1 in
March from 44.4 in February.

The business sub-index for current conditions increased to 51.0
last month from 44.8 the previous month.

The labor sub-index advanced to 58.1 in March from 57.7 in
February, marking the highest reading since September, 2011 when the
index was at 58.4.

The Cabinet Office said the survey was conducted between March 25
and March 30.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]

• China’s CPI +3.6% YoY, up from 3.2% in February
• Japan’s current account surplus JPY1180 billion, a fall of 30.7% YoY
• Former Greek FinMin says Greece must decide whether to stay in EUR or not
• Nikkei -1.3%, Kospi -1.3%, HK -1%, Shanghai _0.5%
• USD/CNY mid-point 6.3020
• Oil fell heavily after big gains on Thursday, down 1.3% on session to $102/bbl
• Gold $1637/oz

Ranges: USD/JPY 81.21/58; EUR/USD 1.3031/1.3103; AUD/USD 1.0253/1.0310; cable 1.5837/90; EUR/CHF 1.2006/16.

Most of Europe is closed today so the market should probably stay very quiet until NY opens later tonight.

The higher than expected CPI was caused by excessive food-price inflation. Interest rates are unlikely to fall whilst inflation has an upward tendency, and this will be seen as generally bearish for the AUD.
The AUD/USD dipped to 1.0255 after the data but buyers seem very solid despite the data and the pair is now back at 1.0270.

February’s CPI was 3.2%

USD/KRW is trading above 1138 after finishing last week near 1130 and USD/SGD is trading at 1.2625, after earlier lows below 1.2600, and the USD demand in Asia is also having an impact on the majors. EUR/USD has fallen back below 1.3050, with next support at last weeks low of 1.3033; cable is also lower, back below 1.5850 and the AUD/USD has also given up 30 pips.

The meeting will last for two days with an announcement expected just after lunch tomorrow. No new measures are expected and the policy rate is expected to remain unchanged.

– Japan Feb Current Account Surplus Y1.178 Trln, -30.7% Y/Y
– Japan Feb C/A Surplus MNI Median Forecast Y1.134 Trln, -33.3% Y/Y

TOKYO (MNI) – Japan marked the first current account surplus in two
months in February as the decline in exports moderated thanks to solid
demand in the U.S. and Southeast Asia, data released by the Ministry of
Finance showed on Monday.

The current account surplus stood at Y1.178 trillion in February,
down 30.7% from a year earlier, while coming in stronger than the median
forecast in a MNI survey for a surplus of Y1.134 trillion, or a 33.3%
fall.

Japan logged a record high current account deficit of Y437.3
billion in January amid slowing global demand, the high yen and slower
shipments to China during Lunar New Year holidays.

The income surplus, the largest component of the current account,
rose 3.9% on the year to Y1.24 trillion in February, marking the 11th
straight y/y rise.

Exports fell 2.0% in February from a year earlier, marking the
fifth straight fall, but the pace of decline decelerated from a 8.5% drop
in the previous month, while imports increased 11.1% for a 26th straight
rise following a 11.2% gain.

The services account — including transport, travel and financial
services — posted a deficit of Y130.4 billion in February, compared
with a deficit of Y31.9 billion a year earlier. The service deficit
widened for the nine straight month.

The combined goods and services accounts were in deficit by Y28.3
billion in February, reversing a surplus of Y688.4 billion a year
earlier. The deficit shrank from Y1.47 trillion marked in January.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5408-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

Despite the weak opening on regional Bourses, EUR/JPY is managing a modest bounce off earlier 106.15 lows.

The actual number was +JPY1178 billion, which is a bit better than expected.

JAPAN DATA: The average wages at 34 major Japanese companies will
rise 1.94% on year in fiscal 2012 just began, according to preliminary
results of annual labor-management talks compiled by the business lobby
Keidanren. The increase will be slightly lower than +1.97% shown in
preliminary data for fiscal 2011. The average wages at major
manufactures will 1.96% in the current fiscal year, slowing from +1.99%
in fiscal 2011, while those at major non-manufactures will gain 1.78%,
up from +1.66%.

Inflation data, which will be released in about 2 hours time, is expected to be fairly steady around last month’s mark of 3.2%.

The more anticipated data will be GDP on Friday next, which will give a better indication of how the Chinese economy is faring and whether a soft landing is the order of the day.

• Mixture of bids and stop-loss sell orders between 81.00/20
• Bids getting heavier near 80.60 (dealers suspect that this will be next stealth intervention level)
• More heavy stops from leveraged accounts below 80.50

Greek politicians are in election mode so any statements from the former FinMin must be treated accordingly. The headline on Bloomberg is that ‘Greece faces choice of staying in EUR or not’ and this is leading to some EUR/JPY selling.

If you’d like to share your trading ideas with others or update existing strategies, then please do so in this thread.

Lots of different factors at play here with EUR/CHF plays, large barriers in EUR/USD, and Greek/Spanish news dominating. There were press reports over the weekend that Greece will definitely require a third bailout but they haven’t had any impact on the EUR this morning. EUR short-positioning on the futures market has been reduced and whilst this isn’t definitive, it is normally a good broad indicator of overall market positioning. We can expect range-trading mode to continue with parameters at 1.3000/1.3200

That’s down from 3.5% in February.

USD/KRW will open today near 1130 and like many other pairs, its in a medium term trading range.

The FX market at its core is made up of a number of large banks, commercial, investment and central, who all have agreed trading limits with each other. Two counterparties can only deal with each other when they have available credit lines open. On Thursday, the SNB was on the bid at 1.2000 for up to EUR10 billion yet the market traded below there, with some interbank platforms reporting lows at 1.1990. This can happen because those neding to sell do not have a credit line (trading limit) with the SNB and so are forced to hit the next best bid. Those selling below the SNB bid must either have been very panicked or else have had less than perfect market information.

This is what I’ve been warning about for the last few weeks as it’s the sort of thing that can happen on a Monday morning, but usually should not happen on a Thursday morning in European liquidity.

It’s a long weekend in many centres but early interbank trade can nonetheless be a very volatile time. That’s not the case this morning with EUR/CHF still holding above 1.2000 and USD/JPY having triggered all the big stops on Friday night.

EUR/USD is trading at 1.3100, AUD/USD at 1.0305, USD/JPY at 81.50 and cable 1.5885.

Good luck today.

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