Daily FX Update, 25 June 2015

v  US Q1 GDP is revised upward to a smaller contraction  v  German June IFO survey eases to 107.4 from May’s 108.5   v  Greece’s creditors reject the new proposal from Greece’s Government          v  Malaysia’s leading and coincident index fall in April v  Members of BoJ’s monetary policy board expect the economic recovery to continue v  Consumer confidence in South Korea drop in June v  Taiwan's industrial production index fall in May

OVERNIGHT MARKET UPDATE:

·         US Q1 GDP was revised up to -0.2% q/q annualised from an initial estimate of -0.7%.  The upward revised was partly due to an upward revision to the pace of growth in consumer spending, which climbed 2.1% (previous: +1.8%).

·         German IFO survey for June missed market expectations, with the business climate index easing to 107.4 (markets expectations: 108.1) from 108.5. Both the current and expectations components declined.  

·         Greece’s creditors rejected the new proposal from Greece’s Government and instead handed them a revised set of proposals that need to be met to unlock additional bailout funds. Greece rejected the revised proposal and want more discussion on debt relief. Key areas of disagreement are over Greece’s proposed pension reforms, value added tax and corporate taxation. The IMF also reportedly favour additional government spending cuts rather than revenue raising measures, as they remain concerned over the capacity of the Greek Government to fully implement the proposed revenue raising measures.

·         Consolidation was the theme in the currency market. Recent outperformers like the AUD and GBP softened and the underperformers like NZD rebounded slightly. Fundamentals and the ongoing Greece negotiations were largely ignored.  

·         US Treasury 10-year yields were lower following news from Greece’s creditors but subsequently lifted somewhat on generally positive data and were close at 2.37% (-4 bps).   

·         Equities slipped as investors sought safety. The Dow Jones and S&P 500 were down 1.0% and 0.7%, respectively.    

·         Crude oil prices were weaker. Strong refinery operations boosted inventories of gasoline and distillate. US crude supplies slid 4.9 million barrel for the week as reported by the EIA versus market expectation of 2 million barrel.                            

Gold prices closed lower despite the news that Greece struggled to come to an agreement with its creditors.

INDICATIVE MAJOR CURRENCIES Last Close  8.05 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 3.7513 3.7490 3.7830 3.7470 3.7920 JPY/MYR (100) 3.0243 3.0230 3.0580 3.0200 3.0800 SGD/MYR 2.7903 2.7750 2.8090 2.7800 2.8400 EUR/MYR 4.1958 4.1870 4.2400 4.1800 4.2700 AUD/MYR 2.8904 2.8860 2.9210 2.8700 2.9400 GBP/MYR 5.8832 5.8730 5.9330 5.8700 5.9800 USD/JPY 124.04 123.65 124.06 123.25 124.25 EUR/USD 1.1185 1.1050 1.1360 1.1150 1.1260 AUD/USD 0.7705 0.7550 0.7860 0.7660 0.7760