Bargain hunters provide support to Asian stocks despite Bernanke's testimony

- Kiwi current account deficit improves more than expected: (NZ Q4 CURRENT ACCOUNT BALANCE: -3.93B V -4.1B expected, prior revised to -4.7B from -4.6B). Despite the higher NZD, New Zealand's current account deficit improved more than expected. The NZD showed a muted reaction to the data, perhaps suggesting that New Zealand's upbeat fundamental outlook is already priced into the currency. The Kiwi export outlook is not expected to improve going forward, as improvements tend to require a materially lower NZD, which is not looking likely in the near term.

- Japanese private consumption momentum slows: (JP FEB RETAIL TRADE MOM: -0.9% V -0.5% expected; YoY: -0.2 v 0.1% expected). Japan's revised GDP data released earlier this month showed consumption rebounded in 4Q06, but today's data seems to suggest that spending momentum has slowed down at the start of 2007. Markets now wait for tomorrow's jobs and CPI data.

- Forex: After we saw some carry trades unwind after the Bernanke testimony, the JPY softened after the softer than expected Japanese retail trade figures. The AUD held steady, with 30-day interbank futures market pricing in a 44% probability that the RBA would lift rates by 25bps next week. The NZD continues to be supported by talk of new uridashi demand and the launch of new Japanese investment trusts. Despite the CNY being set at a new post-revaluation high against the USD, the USD was firmer against the Asian currencies.

- Asian Equities: The Nikkei 225 is lower by more than 0.2% and currently above the 17,200 level. Declines on the Nikkei are being led by exporters and lending shares. Following the release of weaker than expected February retail trade data, shares of department store operator Isetan lost more than 3.5%. The Kospi index is currently higher on gains in shipbuilding shares. The ASX 200 index managed to overcome early selling pressure and is currently higher by more than 0.10% as banking shares are in positive territory. The Hang Seng also opened lower, but rebounded on gains in shares of Cnooc and PetroChina.

- Commodities: Crude oil held steady in Asian and is currently trading just below the $64 level. Spot Gold is lower by more than 0.15%, as gold bulls are unable to build much momentum as Bernanke comments suggested no near-term rate cut, supporting the USD.