If last week spotlight is in the US, then this week we see shifts to Asia. Several PMI report that indicates business climate will be released today and followed by some mid-impact fundamental datas from German, UK, and Japan in the following days. However, after FOMC hullabaloo ends and Ukraine geopolitical tension faded, heads turn to Asia.

If last week spotlight is in the US, then this week we see shifts to Asia. Several PMI report that indicates business climate will be released today and followed by some mid-impact fundamental datas from German, UK, and Japan in the following days. However, after FOMC hullabaloo ends and Ukraine geopolitical tension faded, heads turn to Asia.
chinaChina To Prioritize Reform Over Default
The week began with China poor PMI report which dropped to its lowest in eight months. The drop even slowed Aussie for a while. China slowdown is an old issue that worsen recently, particularly with several companies defaulted and export declined.

The circumstances triggered speculation in the Market that China would probably channel stimulus again or plan emergency bailout. In the aftermath of 2008 financial crisis, Chinese government have thrown a large amount of stimulus in order to avoid collaps. However, Vice Minister of Finance, Zhu Guangyao, said to CNBC yesterday (23/3) that the government will be more careful, as there are some negative side-effects from the past stimulus. In regard of defaults, Zhu also indicated similar careful attitude. He stated, We must balance the moral hazard issue and how to make real reforms, to take away the risk of bubbles bursting and causing some systematic impact.

Australia, Despite Of China
Luckily for Australia, their economic dependence on China apparently thinned. Australian employment and economic growth improved despite of China slowdown. In other words, Reserve Bank of Australia's effort in cutting down interest rates and depreciate its currency have successfully recovered Australian businesses.  

The phenomenon is also observed by Market Players. Evidently, Aussie this morning instantly revived after Chinese PMI surprise factor fade away. Soon after the PMI released, it fell, but two hours later gained against USD and Euro.

Japan Nears Tax Hike
China also loses influence on Yen. Yen weakness this morning pointed toward worries over consumption tax hike next months, instead of China PMI. The tax hike is one of Abenomics plan to boost inflation. Nevertheless, many doubts the move as Japan economics record can't be called steady yet. Structural reforms still has far to go and export stay unsatisfactory.  

Japan fundamental reports next Friday is hoped to bring clarity for the market before the hike. Irrespective of people's worries, Governor of Bank of Japan Haruhiko Kuroda confident that 2% inflation target will be attained as planned. Last Wednesday Kuroda also said that BoJ prepared to adjust its policy if deemed necessary. For the time being though, analysts estimated February inflation will keep at 1.3%, while retail sales and household spending is predicted to rise slightly.

Compared to the US or Europe, Asia-Pacific countries seemed more fragile. But we can't forget that this region has far higher potentials and continue to grow despite of various obstacles. To say that this or that shows weakness is easy, but the real skill exist deep in the real economy. Western economy is big on financial aspect, but Asians are big in the basics, and that made them far more resilient.

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