Chinese equities recover some losses after yesterday's correction

- Chinese equities rebound strongly after yesterday's heavy selling: Traders said that a strong CNY could help offset some of the concerns about a possible PBoC interest rate hike, and bargain hunters stepped in to boost Chinese stocks. The emerging consensus seems to be that yesterday's GDP figures don't point to an overheating economy and will please the Communist Party (it's hard to create a "harmonious society" without strong growth and job creation). Today's gains on Chinese stock markets are being driven by shares of power companies and consumer stocks.

- Forex: The JPY was soft after the German Finance Minister Steinbrueck gave the green light for the carry trade to carry on, saying that he sees no need for EU finance ministers and central bankers to discuss the EUR at a weekend meeting. The USD was trading mixed in Asia. The Philadelphia Fed survey showed that prices paid, employment, and new orders components were firmer than the prior month, so dealers are refraining from thrashing the USD. The CAD took a breather after its recent rally. The consensus is that the CAD bullish fundamentals remain intact, and that there is virtually no chance of the reserve bank cutting rates. In Asian currencies, traders said that active forward trades by Korean exporters are likely to push USD lower against KRW. The KRW lost some strength after the Bank of Korea said that excessive speculative trading can cause disorder in forex markets.

- Mixed Japanese data doesn't provide clarity on BoJ rumors: (JP FEB ALL INDUSTRY ACTIVITY INDEX MOM: 0.9% V -0.3% expected; Prior revised to -0.2% from 0.7% prior) The JPY showed little initial reaction to the activity index (a volatile data series) as the strong headline figure counterbalanced the sharp downward revision of the prior number. JPY bulls await stronger data to add credibility to rumors that the BoJ will hike rates much sooner than expected.

- Equities: Asian equities rebounded mildly from yesterday's losses. At the time of writing this, the Nikkei has not managed to retrace yesterday's losses. The Nikkei rebound is expected to be limited as most buying is coming from players looking for a technical bounce. Gains on the Nikkei are being driven by exporters as the USD/JPY pair rose above 118.00. In Japanese corporate news, shares of KDDI rose on a press report that the company's FY profit may exceed its original forecast, and Toyota gained on news of production expansion. The ASX 200 index is higher, but trading remains cautious. Gains down under are being led by miners and Coca-Cola Amatil. South Korean equities are higher by more than 1.0% on gains in shares of exporters. Shares of LG Electronics are lower by more than 1.5% following the company's earnings report. The Hang Seng is tracking Chinese shares higher as bargain hunters bought blue-chips.

- Commodities: Spot gold and crude traded in tight ranges. Shanghai Copper is lower for the second consecutive session on fears that the Chinese government will seek to slow China's economy.