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EUROPEAN OPENING NEWS INCLUDING: WTI crude futures reversed its earlier losses to trade in positive territory

January 18 2013, 8:26am
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Asia

Chinese Real GDP (Q4) Y/Y 7.9% vs. Exp. 7.8% (Prev. 7.4%)

- Real GDP (Q4) Q/Q 2.0% vs. Exp. 2.2% (Prev. 2.2%)

- National Bureau of Statistics says China growth of 7-8% is a good balance and China can not return to a period of super-rapid growth. (Newswires)

Chinese Industrial Production (Dec) Y/Y 10.3% Vs. Exp. 10.2% (Prev. 10.1%)

Chinese Retail Sales (Dec) Y/Y 15.2% Vs. Exp. 15.1% (Prev. 14.9%)

Japanese economic advisor Hamada says JPY weakness to 95 or 100 Vs. USD is nothing to worry about. (Newswires) He also added that the Bank of Japan shouldn't set a timeline on easing as long as deflation continues and that the BoJ law should be revised. 

During the US session, it was reported that the Bank of Japan are to mull scrapping the 0.1% floor it sets on short-term interest rates, according to sources (Newswires) 

Overnight, 10yr JGBs did not pare the opening losses, closing the session in minor negative territory, down 12 ticks at 144.26, with expectations that the Bank of Japan will expand their asset purchase program at their meeting next week. In the meantime, the Nikkei 225 held on to the largest percentage gain since March 2011, closing higher by 2.9%. (RANsquawk)

Europe

European news flow remains quiet overnight with little in the way of Tier-1 Eurozone data. However the German Chancellor Merkel is due to be speaking at 0930GMT. (RANsquawk)

FX

Overnight, USD/JPY continued to move higher echoing the US session after we heard source comments that the Bank of Japan are to mull scrapping the 0.1% floor it sets on short-term interest rates and pledge to buy assets open-endedly until inflation is seen. Adding to the JPY weakness, Japanese economic advisor Hamada said JPY weakness to 95 or 100 against USD is nothing to worry about. Consequently, USD/JPY hit its 2.5-year high as markets positioned for the Bank of Japan to take bold policy action to tackle deflation. In the meantime, AUD/USD trended lower throughout the session, despite the better than expected Chinese Q4 GDP data. (RANsquawk)

Geopolitical

Two days of talks between the IAEA and Iran have ended in Tehran, apparently without an agreement, according to a diplomatic source. (AFP)

Commodities

Heading into the EU open, WTI crude futures reversed its earlier losses to trade in positive territory. WTI futures trade USD 95.56, up USD 0.07. Last price taken at 0620GMT. (RANsquawk)

US

T-notes finished yesterday's session firmly in negative territory, pushing the 10y yield higher for the first time in five days to print a session high at 1.8892%. The under-performance in the fixed income market follows the better weekly US jobs data coming in lower than market expectations, allied with a stronger report on the US housing starts. The upward pressure on yields was likely to have been mitigated by the large JPM deal pricing (USD 6bln). Treasuries lost further ground following source comments the BOJ will consider scrapping the 0.1% floor it sets on short-term rates, pledging to buy assets open-ended until 2% inflation is foreseen. Fixed income players fear that the Japanese may sell Treasuries in order to finance the massive asset buying. At the pit close T-notes settled at 131.27+ down 14+ ticks. T-notes made losses overnight alongside the rally in Japanese stocks, heading into the European open down 3 ticks at 131.25. Last price taken at 0620GMT. (RANsquawk)

Fed's Lockhart says could taper bond buys in future; could reduce purchases of MBS or treasuries. (Newswires)

Fed's Fisher opposes QE while seeing Fed rate policy boosting economy and says there is some traction now in the economy. (Newswires)

US House Budget Committee Chairman Paul Ryan said his party is considering pressing only for a short term extension of US borrowing authority. Ryan, speaking to reporters at a Republican retreat for House members, said he believes the Obama administration has and should use authority to prioritize its payments to avoid a debt default in the even of any delays in raising the debt limit. (Newswires)

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