~ shares weaker, Yen strengthens; China posts trade surplus of surprise

-(JP), the BANK OF JAPAN (YOU 'RE) LEAVES RATE UNCHANGED TARGET RANGE BETWEEN 0.0% TO 0.10%, AS EXPECTED >-(CN) CHINA MAR TRADE BALANCE: + $ 5.4 (B) (V)-$ 3.2 BE; Q1 $ 670M v-$ 1.0 B y/y
-(AU) AUSTRALIA MAR NAB BUSINESS CONFIDENCE: 3 V 1 PRIOR; BUSINESS CONDITIONS: 4 V 3 PRIOR
-(AU) AUSTRALIA MAR ANZ JOB ADVERTISEMENTS (M/M): 1.0% V 3.3% PRIOR (3-month low; 3rd consecutive m/m increase) >-(AU) AUSTRALIA AIG PERFORMANCE OF CONSTRUCTION INDEX: 36.2 V 35.6 PRIOR (first rise in 3 months; 22nd month of contraction)
-(ID) INDONESIA FEB M2 MONEY SUPPLY Y/Y: 17.7% V 17.2% PRIOR
-(A) MALAYSIA FEB INDUSTRIAL PRODUCTION Y/Y: 7.5% V 5.0% E; MANUFACTURING SALES VALUE Y/Y: 10.5% V 4.1% PRIOR
-(A) MALAYSIA FEB TRADE BALANCE (MYR): 10.6 B V 10.2 BE
-(UK) UK MAR LLOYDS EMPLOYMENT CONFIDENCE INDEX:-58 V-69 PRIOR
-(UK) UK MAR RICS HOUSE PRICE BALANCE:-10% V-13% (E)
-(CO) Colombia Mar Producer Price Index M/M:-0.2% v, 0.1% of the prior; Y/Y: 1.6% v 2.7% prior
-(CO) Colombia Feb Exports: $ 4.8 (B) v $ 4.7 (B) prior

*** Markets Snapshot (as of 04: 30GMT) ***
-Nikkei225 + 0.2%
-& P/ASX-0.7%
-Kospi was 0.4%
-Taiwan Taiex + 0.1%
-The Singapore Straits Times + 0.2%
Shanghai Composite-1.0%
-Hang Seng-1.1%
-& P Futures + 0.1% at 1,376
-June gold + 0.6% at $ 1,653/oz
-May Crude-0.4% at $ 102.33

*** Overview/Top Headlines ***
Asian markets were mixed with currencies little changed in the session. Most notable was the USD/JPY down 0.3% or about 30 pips to ¥ 81.28 after the Bank of Japan in a unanimous vote left rates unchanged and agreed to not announce any new monetary easing measures. The're also kept their economic assessment unchanged. You're reiterated that the y/y, rate of change in the CPI is unchanged and that they will pursue powerful monetary easing to combat deflation. EUR/JPY dipped to ¥ 106.56. China recorded a surprise trade surplus series in March of $ 5.35 (B) against a forecast for a deficit of $ 3.2 (B). Exports came in above expectations while imports were much lower than the 9.0% expected at 5.3%. While positive overall the lower imports indicate that demand may be weaker than initially thought, though the behavior should ease some fears of a hard landing. China Customs Bureau head Zheng said that the March trade data shows that the global situation remains "grim" and that the 2012 trade behavior likely to shrink vs. 2011. The AUD/USD jumped higher on the news to session highs of $ 1.0358 before falling back to $ 1.03. Markets will now look to Friday's release of China Q1 GDP data. Fed Chairman Bernanke said that financial stability mission is as important as monetary policy; The Fed no longer has the same tools to counter money fund problems. Economy is still far from recovering from the financial crisis. Fed's emergency lending power has not been seriously weakened.

*** Speakers/Geopolitical/In the press ***
-(CN) China State Administration of Foreign Exchange (SAFE): China Reiterates will ", then" promote convertibility of the yuan-Chinese press
-(BR) Brazil Central Bank Tombini: Expects stronger growth in H2 v H1; SELIC rate target likely to drop this slightly above the record low
-(JP) Japan Fin Min Azumi: Welcomes opposition LDP's policy goal is to double the sales tax; LDP's plan shows 10% hike in sales tax is unavoidable >-(AU) Australia is close to breaching its A $ 250B debt ceiling less than a year after raising it to the new cap due to a larger than expected deficit-The Australian
-(CN), According to the China Securities Journal March new yuan loans may be CNY900B v CNY798Be with Q1 loans totaling CNY 2.35 T v CNY 2.4 T target

** * Equities * **
-THE DAP.AU: Has received offers for JV on non-producing uranium assets
-WPL.AU: Will delay final Browse decision; Was given approval to amendments to the Browse Basin retention leases
-SMI, 981. HK: Raises Q1 Rev guidance + 14-15% q/q (implies $ 330.1-333.0 M) from + 7-9% y/y, prior
-AUN.AU: ACCC approves deal with Foxtel; Deal unlikely to substantially lessen competition

*** US Equities ***
-VVUS: Receives Notification of Qnexa (R) PDUFA Date Extension, delaying the new drug application (NDA) review by three months; -8.5% after hours
-HLIT: Reports prelim Q1 $-0.02.tar.bz2-$ 0.09, 0.03 v e $ 125-128 m v $ 137Me ($ 132-142M prior guidance); -4.0% after hours

*** FX/Fixed Income/Commodities ***
-(TW) Taiwan sells TWD40B vs. TWD40B indicated in 5-Year Bonds; Programmable Yield%
-Various container shipping firms plan to raise rates for routes between the US and Asia to $ 50-100/TEU-US financial press
-(AU) Newcastle Coal Exports in the week ended April 9th w/in: + 4.0
-(AU) Export from Australia's larger bulk commodity ports show a huge improvement y/y in Q1 despite heavy industrial action impacting the iron ore and coal sectors-the Australian Financial Review

FOREX NEWS - Yen at 1-mo lows as Japan posts rare trade deficit

* Dollar, euro at one-month highs vs yen
* Macro funds seen selling yen as Japan logs first deficit since 1980
* Euro lower vs dollar as Greek worries offset strong German IFO data
By Anirban Nag
LONDON, Jan 25 (Reuters) - The yen dropped to one-month lows against the dollar and the euro on Wednesday, as speculators and investors took data showing Japan had logged its first annual trade deficit since 1980 as a cue to unwind bullish bets on the Japanese currency.
The euro briefly rose to a session high against the dollar after a strong German business sentiment survey offered fresh evidence that Europe's largest economy may skirt a recession.
The focus is now shifting to the Federal Reserve, which is expected to begin a new practice of announcing individual policymakers' interest rate projections when its two-day meeting ends later on Wednesday.
Economists polled by Reuters expect the U.S. central bank will signal that it is unlikely to start hiking interest rates until the first half of 2014, more than five years after chopping them to near zero. Any surprise on the dovish side could see the dollar come under pressure against the euro and the yen, analysts said.
"U.S. yields have pushed up in recent days and if data there continues to improve we would see the dollar supported," said Geoff Kendrick, currency strategist at Nomura.
"But the risk is the Fed could be more dovish than what the market is expecting, in which case you might see the dollar pull back. In any case, I do not see the dollar rising to 80 yen."
The dollar reached as high as 78.14 yen on trading platform EBS, its highest level since late December. Selling in the yen picked up after Japan logged an annual trade deficit in 2011 for the first time in over 30 years.
Traders cited robust offers from Japanese exporters from 78 yen up to 79 yen although many expect selling in the currency to gather pace on steady unwinding of yen long positions placed by speculators, with model and macro funds also keen to sell.
In the options market, dollar/yen one-month risk reversals moved to 0.8 in favour of dollar calls, around the strongest dollar bias since 2003 and indicating some more gains for the greenback. Implied vols ticked higher but remained subdued at around 8 percent for the one-month.
Lee Hardman, currency economist at Bank of Tokyo Mitsubishi UFJ was sceptical that the trade deficit would have a lasting impact on the yen.
"With Japan running a sizeable and more stable investment income surplus totalling close to 15 trillion yen in the twelve months to November 2011 its current account balance has remained firmly in surplus," he said. "Recent yen weakness is more likely corrective than a trend reversal. The Fed's commitment to maintain low rates will help cap dollar/yen upside potential."
Chartists said the dollar would have to battle a wall of resistance posed by the 200-day moving average at 78.35 yen and the 61.8 percent retracement of the October-January fall at 78.31 yen.
GREECE JITTERS WEIGH
The broad weakness in the yen lifted the euro to a four-week peak of 101.88 yen. It was last trading at 101.50 yen, still up 0.3 percent on the day and well above its 11-year low of 97.04 struck on Jan. 16.
Many Japanese exporters set their euro rate targets at 105 yen, so the pair would run into heavy selling pressure ahead of that level, traders said.
The euro gave up gains against the dollar made immediately after the German Ifo survey as growing worries that the European Central Bank would have to write down its holdings of Greek debt, crimping its ability to purchase other periphery debt, drove Italian yields higher.
"Uncertainty over the Greek debt talks and disappointment that there has still been no deal is spoiling the party for the euro," said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.
"So despite the good IFO numbers, the euro is not able to break past $1.3080 which is a good resistance level."
The single currency was last trading at $1.2990, off a session high of $1.3052 struck immediately after the German IFO survey was released and 0.2 percent lower on the day. It struck a three-week peak of $1.3063 on Tuesday, with decent resistance seen in the $1.3075-1.3080 area - highs struck earlier this month and in late December.
The common currency has been supported reasonably well against the dollar in recent sessions, benefitting from a squeeze in extreme short positions. A decline in funding costs for Spain and Italy and recent data that have showed a surprising strength in manufacturing and services this month have also lent support.
Portugal also eased market jitters after its prime minister said the country was not seeking to renegotiate or extend its 78 billion euro bailout package.

FOREX NEWS - Yen at 1-mo lows as Japan posts rare trade deficit

* Dollar, euro at one-month highs vs yen

* Macro funds seen selling yen as Japan logs first deficit since 1980

* Euro lower vs dollar as Greek worries offset strong German IFO data

By Anirban Nag

LONDON, Jan 25 (Reuters) - The yen dropped to one-month lows against the dollar and the euro on Wednesday, as speculators and investors took data showing Japan had logged its first annual trade deficit since 1980 as a cue to unwind bullish bets on the Japanese currency.

The euro briefly rose to a session high against the dollar after a strong German business sentiment survey offered fresh evidence that Europe's largest economy may skirt a recession.

The focus is now shifting to the Federal Reserve, which is expected to begin a new practice of announcing individual policymakers' interest rate projections when its two-day meeting ends later on Wednesday.

Economists polled by Reuters expect the U.S. central bank will signal that it is unlikely to start hiking interest rates until the first half of 2014, more than five years after chopping them to near zero. Any surprise on the dovish side could see the dollar come under pressure against the euro and the yen, analysts said.

"U.S. yields have pushed up in recent days and if data there continues to improve we would see the dollar supported," said Geoff Kendrick, currency strategist at Nomura.

"But the risk is the Fed could be more dovish than what the market is expecting, in which case you might see the dollar pull back. In any case, I do not see the dollar rising to 80 yen."

The dollar reached as high as 78.14 yen on trading platform EBS, its highest level since late December. Selling in the yen picked up after Japan logged an annual trade deficit in 2011 for the first time in over 30 years.

Traders cited robust offers from Japanese exporters from 78 yen up to 79 yen although many expect selling in the currency to gather pace on steady unwinding of yen long positions placed by speculators, with model and macro funds also keen to sell.

In the options market, dollar/yen one-month risk reversals moved to 0.8 in favour of dollar calls, around the strongest dollar bias since 2003 and indicating some more gains for the greenback. Implied vols ticked higher but remained subdued at around 8 percent for the one-month.

Lee Hardman, currency economist at Bank of Tokyo Mitsubishi UFJ was sceptical that the trade deficit would have a lasting impact on the yen.

"With Japan running a sizeable and more stable investment income surplus totalling close to 15 trillion yen in the twelve months to November 2011 its current account balance has remained firmly in surplus," he said. "Recent yen weakness is more likely corrective than a trend reversal. The Fed's commitment to maintain low rates will help cap dollar/yen upside potential."

Chartists said the dollar would have to battle a wall of resistance posed by the 200-day moving average at 78.35 yen and the 61.8 percent retracement of the October-January fall at 78.31 yen.

GREECE JITTERS WEIGH

The broad weakness in the yen lifted the euro to a four-week peak of 101.88 yen. It was last trading at 101.50 yen, still up 0.3 percent on the day and well above its 11-year low of 97.04 struck on Jan. 16.

Many Japanese exporters set their euro rate targets at 105 yen, so the pair would run into heavy selling pressure ahead of that level, traders said.

The euro gave up gains against the dollar made immediately after the German Ifo survey as growing worries that the European Central Bank would have to write down its holdings of Greek debt, crimping its ability to purchase other periphery debt, drove Italian yields higher.

"Uncertainty over the Greek debt talks and disappointment that there has still been no deal is spoiling the party for the euro," said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.

"So despite the good IFO numbers, the euro is not able to break past $1.3080 which is a good resistance level."

The single currency was last trading at $1.2990, off a session high of $1.3052 struck immediately after the German IFO survey was released and 0.2 percent lower on the day. It struck a three-week peak of $1.3063 on Tuesday, with decent resistance seen in the $1.3075-1.3080 area - highs struck earlier this month and in late December.

The common currency has been supported reasonably well against the dollar in recent sessions, benefitting from a squeeze in extreme short positions. A decline in funding costs for Spain and Italy and recent data that have showed a surprising strength in manufacturing and services this month have also lent support.

Portugal also eased market jitters after its prime minister said the country was not seeking to renegotiate or extend its 78 billion euro bailout package.

© Thomson Reuters 2011. All rights reserved.

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