Weekly FX Update, 22 June 2015

v  USD has largely look abroad for its cues and keeps to an unpredictable pattern v  Markets take a net dovish stance on FOMC announcement v  The dip in USD helps Euro throw caution surrounding Greece to the wind v  Asian currencies end the week on bullish setting against US dollar v  RM gains against USS on stronger technical ground  Markets took a net dovish stance on FOMC announcement late Thursday as the FOMC left the target federal fund rate unchanged at 0-0.25%. More importantly, FOMC member projection for interest rates (dots projection) turned out to be more dovish than expected – median rate projection for end 2016 and 2017 have been revised down by 25 basis points to 1.625% and 2.875%. Gains in the UST 10-year yields were reversed out sharply. Outlook of U.S. dollar has turned more uncertain than ever and knocked the greenback to one-month lows against a wide swath of rivals. Once again, the Fed said that rates could rise later this year, repeating a familiar refrain that has already become a part of the dollar’s fabric. Doubts about when U.S. rates will rise remained selling points for US dollar bears. Having said that US equities rallied with Nasdaq breaking its record high from dot-com era held since 10-March 2000. The Fed Reserve will have four more meetings this year with the next set for July 28-29. The dip in US dollar helped Euro throw caution surrounding Greece to the wind. Instability should remain the name of the game for the euro until markets know definitively what the immediate future holds for Greece. A higher risk of a Greek default should, at the very least, slow the euro’s ascent against the US dollar. Euro at a point to 1.1440 after German newspaper Die Zeit reported that European creditors would extend Greece's existing aid program until year's end before reversing as officials denied the report. The Greek government is unwilling to make cuts to its pensions and PM Tsipras has told creditors to ‘get real’. Greek Finance Chief Yanis Varoufakis assured that Greece aims to remain in Eurozone respectively. Japanese Yen dipped to a low 122.48 before recovered to 123.00 handle with Bank of Japan (BoJ) continued to indulge in poker-faced, contentment with the status quo and on the back of Japanese Yen selling against the Euro and British Pound. Asian currencies ended the week on bullish setting against US dollar. Leading the pack were Indian Rupee, Korean won and Singapore dollar. Korean Won gained 0.9% against US dollar in response to strengthening in Japanese Yen and expectation of supplementary fiscal budget to offset negative impact from the MERS scare. Decision is likely to be firmed by end of June of about KRW20-25 trillion to complement accommodative monetary policy. Singapore dollar traded stronger on the back of stronger Euro and Japanese after sliding from a high of 1.3474 towards 200-moving average of 1.3274 handle with buying interest from leveraged names and local funds and trade surplus that improved to SGD6.6 billion in May 2015 compared to SGD5.8 billion reported in the preceding month. Ringgit Malaysia gained 0.41% against US dollar on stronger technical ground after cross SGD/MYR consolidating in the 2.78-2.79 range, stable commodity prices, build up in inflationary expectations and decline in 1-month USD/MYR volatility. Strong corporate and institutional buying on large dips was seen after stops loss sales were triggered below 3.7300. Selling pressure on local equities however remained strong. On the macro front, media report that the Malaysia governor said “every effort” must be taken to resolve domestic issues that have contributed to the volatility to the ringgit, including credit rating and concerns about government linked entities. In the parliamentary reply, Finance Minister Datuk Seri Najib said the government has guaranteed debts totaling RM172 billion or about 14.7% as of last year aimed for development projects, which were of public interest. Meanwhile, consumer price (CPI) rose 2.1% in May 2015 driven by increase in housing-related and services. This compared to 1.8% in the preceding month.                            Market Movers for the Week v  From US: Existing Home Sales (May), Durable Goods Orders M/M (May), Markit Manufacturing PMI Flash (Jun), New Home Sales M/M (May), GDP Growth Rate Q/Q Final (Q1 2015), Personal Income M/M (May), Personal Spending M/M (May), Markit Services PMI Flash (Jun), Michigan Consumer Sentiment Final (Jun).      v  From Eurozone: Eurozone Consumer Confidence Flash (Jun), Eurozone Leaders Meeting, Eurozone Markit Manufacturing PMI Flash (Jun), Eurozone Markit Services PMI Flash (Jun), Eurozone Loan Growth Y/Y (May), German IFO Business Climate (Jun), German GFK Consumer Confidence (Jul).       v  From Asia: Japan BoJ Monthly Report, Japan Markit/JMMA Manufacturing PMI Flash (Jun), Japan BoJ Monetary Policy Meeting Minutes, Japan Household Spending Y/Y (May), Japan Unemployment Rate (May), Japan Inflation Rate Y/Y (May), China HSBC Manufacturing PMI Flash (Jun), Taiwan Unemployment Rate (May), Taiwan Interest Rate Decision, Philippine Interest Rate Decision, Malaysia Unemployment Rate (Apr).           INDICATIVE MAJOR CURRENCIES Last Close 8.25 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 3.7435 3.7210 3.7540 3.7190 3.7640 JPY/MYR (100) 3.0507 3.0270 3.0600 3.0200 3.0800 SGD/MYR 2.8064 2.7830 2.8160 2.7800 2.8400 EUR/MYR 4.2496 4.2300 4.2650 4.2100 4.3000 AUD/MYR 2.9094 2.8860 2.9190 2.8700 2.9400 GBP/MYR 5.9458 5.9140 5.9490 5.8900 6.0000 USD/JPY 122.71 122.60 123.01 122.20 123.20 EUR/USD 1.1352 1.1210 1.1520 1.1310 1.1420 AUD/USD 0.7772 0.7610 0.7920 0.7720 0.7820