Asia Pacific

Japan's Economy Makes Surprise Fall Into Recession. Japan's economy unexpectedly shrank for the second consecutive quarter, leaving the world's third largest economy in technical recession. Gross domestic product (GDP) fell at an annualised 1.6% from July to September, compared with forecasts of a 2.1% rise. That followed a revised 7.3% contraction in the second quarter, which was the biggest fall since the March 2011 earthquake and tsunami. Prime Minister Shinzo Abe is widely expected to call a snap election to seek a mandate to delay an increase in the sales tax to 10%, scheduled for 2015. The tax increase was legislated by the previous government in 2012 to curb Japan's huge public debt, which is the highest among developed nations. (BBC)

Japan Seeks To Strengthen 2015 Growth After Recession Hit. With Japan’s slump into its fourth recession since 2008 threatening the failure of the Abenomics reflation program, Prime Minister Shinzo Abe’s administration is taking steps to shore up growth for the coming year. Economy Minister Akira Amari told reporters yesterday in Tokyo there’s a high chance of a stimulus package. Etsuro Honda, an adviser to Abe, said a 3 trillion yen ($26b) program was appropriate and should go toward measures that directly help households, such as child care support. (Bloomberg)

China To Cut 40b Yuan A Year In Fees To Spur Business Growth. China will cut roughly 40b yuan ($6.5b) a year in taxes and fees as part of an effort to stimulate the slowing economy, the State Council said. Starting January 2015, the government will scrap 42 administrative fees and 12 business registration fees, measures specifically tailored to relieve burdens on small businesses, according to the State Council, China's cabinet. Businesses with monthly sales of less than 30,000 yuan will be exempt from five additional charges for the next three years, according to the State Council, which additionally said it would target pricing reforms to promote competition in the energy, transportation and environment sectors. (Reuters)

Thai Economy Grows Less Than Estimated. Thailand’s economy grew much less than expected in the July-September quarter as exports and tourism contracted, forcing the authorities to cut the growth forecast for this year. The weak outlook has raised new doubts the junta can quickly turn the economy around. Southeast Asia’s second-largest economy grew 1.1% in the third quarter from the prior three months, and 0.6% from a year earlier, the National Economic and Social Development Board said yesterday. (Reuters)

Indonesia Raises Fuel Prices As Jokowi Enacts Key Pledge. Indonesian President Joko Widodo raised fuel prices to reduce state energy subsidies, enacting a key election pledge less than a month after taking office to narrow the budget deficit and free funds for development plans. The price of subsidized gasoline increased to 8,500 rupiah ($0.70) a liter from 6,500 rupiah effective today, Widodo told reporters in Jakarta late yesterday. Diesel has been raised to 7,500 rupiah a liter from 5,500 rupiah, he said. (Bloomberg)

Australia, China Deepen Ties With Landmark Free Trade Deal. China and Australia on Monday sealed a landmark free trade agreement more than a decade in the making, significantly expanding ties between the world's second largest economy and one of Washington's closest allies in Asia. The deal, which Australia called the best ever between Beijing and a Western country, will open up Chinese markets to Australian farm exporters and the services sector while easing curbs on Chinese investment in resource-rich Australia. China is already Australia's top trading partner, with two-way trade of around A$150b($130 billion) in 2013. On Monday they witnessed 14 commercial agreements between companies worth potentially more than A$20b($17.56 billion).Once the agreement is fully implemented, 95% of all its exports will enjoy duty free entry into China, Australia said. (Reuters)

USA

Industrial Output In U.S. Unexpectedly Fell In October. Factory production struggled to gain traction in October as automakers cut back for a third consecutive month, showing U.S. manufacturing was off to a slow start in the fourth quarter. The 0.2% increase in output matched September’s advance after it was revised down, figures from the Federal Reserve in Washington showed today. Total industrial production unexpectedly dropped 0.1%, reflecting the vehicle pullback and less demand at utilities, mining companies. (Bloomberg)

Europe

Draghi Says ECB Measures May Entail Buying Government Bonds. European Central Bank President Mario Draghi explicitly cited government-bond buying as a policy tool officials could use to stimulate the economy if the outlook worsens. “Other unconventional measures might entail the purchase of a variety of assets, one of which is sovereign bonds,” Draghi said in Brussels today during quarterly testimony to lawmakers at the European Parliament. “2015 needs to be the year when all actors in the euro area, governments and European institutions alike, will deploy a consistent common strategy to bring our economies back on track,” Draghi said in Brussels today. “Monetary policy alone will not be able to achieve this.” (Bloomberg)

Currencies

Dollar Rises Against Rivals After Data. The U.S. dollar gained against its main rivals Monday as Japan said it dipped back into a recession in the third quarter, while U.S. economic data continued to paint a picture of strong economic growth. The dollar traded at 116.47 yen, hovering just below a seven-year high of ¥117.05 yen reached earlier Monday. It traded at ¥116.29 late Friday. The euro fell to $1.2454 Monday, after trading above $1.2500 before Draghi’s remarks. Elsewhere, the euro fell to 0.7963 pound, compared to 0.7995 pound before Draghi’s remarks. The ICE U.S. Dollar Index a measure of the greenback’s strength against a basket of six currencies, gained 0.45% Monday to 87.5250. The pound traded at $1.5644 Monday, compared to $1.5670 late Friday. (Market Watch)

Commodities

Oil Ends Down On Japan, But Pares Loss On OPEC Speculation. Oil pared early losses on Monday after Russia and Venezuela appeared to be coordinating on a price defense plan, but Brent and U.S. crude still ended lower on worries over Japan's recession. Oil pared early losses on Monday after Russia and Venezuela appeared to be coordinating on a price defense plan, but Brent and U.S. crude still ended lower on worries over Japan's recession. Benchmark Brent crude's front-month contract settled down 10 cents at $79.31 a barrel, after falling as much as $1.47 to a session low at $77.94. Front-month U.S. crude finished 18 cents lower at $75.64 a barrel, after a session bottom at $74.71. (Reuters)

Gold Eases Off Two-Week High As Dollar Gains On Japan Recession. Gold eased from a two-week high hit earlier on Monday as the dollar rose on news that Japan had slipped into recession, and strong technical resistance could also further limit bullion's gains in the near term, analysts said. Spot gold was down 0.1% at $1,187.15 an ounce by 2:22 p.m. EST (1922 GMT) after peaking at $1,193.95, the highest since Oct. 31. Among other precious metals, platinum fell 1% to $1,199.50 an ounce, while palladium rose 0.6% to $765.72 an ounce. Silver was down 0.7% at $16.14 an ounce. (Reuters)