Morning from Europe!

USD vs. Asian FX gap opened higher on the back of the third consecutive election victory for the DPP in Taiwan, but equities are trading up at the same time in both Taiwan and Japan. China has responded rhetorically as expected, but interestingly the PBoC kept the MLF rate unchanged despite expectations of a 10bp cut.

Will Chinese key figures prove to be better than feared in December (GDP, Retail Sales, Industrial Production all released this week) since the PBoC refrains from cutting?

The big debate in Asian markets currently is whether the rally in the Nikkei index is worth pursuing. The index is off to a flying start, but it happens amidst renewed weakness in the JPY.

Is this an actual equity rally or rather just a currency debasement story in Japan?

Chart 1: Nikkei not performing as strongly in USD terms