Global Markets Overview

US equities printed a record high yet again, but this time with not quite as much conviction as we've seen in recent sessions. Meanwhile, a shocking German CPI print kept the stimulus camp happy in Europe, especially after the ECB flagged inflation as one of its key concerns. Data out of the US was quite encouraging with the final manufacturing PMI print mildly ahead of consensus, while the ISM manufacturing PMI was relatively in-line with consensus. There was a bit of drama with the ISM print after a couple of incorrect releases. Regardless, the USD remained fairly well bid and managed to extend its gains particularly against the yen.

USD/JPY printed a high of 102.49, but has since pulled back a touch. Regardless, this should be enough to underpin gains in the Nikkei today and we are currently calling it up 1% and above 15,000. The last time it traded above 15,000 was back in March.

There are a couple of things driving Japan this week, firstly USD strength is helping drive USD/JPY higher, with anticipation we'll get some strong readings out of the US this week keeping the greenback bid. Secondly there is a lot of talk around the government pension fund and the potential to pull around $200 billion out of JGBs and into foreign assets. The net effect of this would be a weaker yen. On Japan's economic calendar today we have the monetary base and average cash earnings data due out.

RBA to remain on hold

It's yet another big day for the AUD, with another raft of releases on the calendar. The data kicks off at 11.30 AEST, with retail sales and current account data. Both readings are expected to show signs of improvement. Then at 14.30 AEST we have the RBA rate decision of which we expect to remain on hold. A couple things to look out for from the statement will be potential for jawboning and change in commentary on the back of the budget. Should we get some jawboning and hints that tighter fiscal conditions are likely to lead to a prolonged period of easy monetary policy, then the AUD could be in for further falls. AUD/USD has been sidelined at 0.925 with near-term support in the 0.92 region.

Minor recovery for iron ore

Ahead of the open we are calling the ASX 200 up 0.1% at 5525. Yesterday's rally from the lows will be quite encouraging for investors today. Additionally, the fact that iron ore bounced a little off the lows should bode well for some of the miners.

China returns to trade after a break yesterday and will have an opportunity to react to the developments from the weekend. We also have a couple of important prints out of China, with non-manufacturing PMI at 11.00 AEST and the final HSBC manufacturing PMI print at 11.45 AEST.

Staying with the emerging markets theme, the RBI also has its policy decision today. Base metals also had a fairly good night and this will be consistent with a materials space recovery today. While iron ore bounced, gold remained under pressure and this will keep the gold names on the back foot.

On the company news front, Westfield, David Jones and SAI Global will be ones to watch. Karoon Gas will also be on the radar after a sharp rise yesterday was greeted by significant profit taking.

Asian markets opening call	Price at 8:00am AEDT	Change from the Offical market close	Percentage Change
Australia 200 cash (ASX 200)	5,523.80	5	0.10%
Japan 225 (Nikkei)	15,059.00	123	0.82%
Hong Kong HS 50 cash (Hang Seng)	23,164.60	83	0.36%
China H-shares cash	10,331.70	15	0.14%
Singapore Blue Chip cash (MSCI Singapore)	374.80	1	0.14%
Iron Ore (62%Fe)	92.1	0.30	0.33%