Daily FX Update, 14 August 2015

v  US’s retail sales gain 0.6% m/m in July v  Minutes from  ECB’s 16 July meeting struck a marginally dovish tone v  Malaysia's GDP growth moderate at 4.9% in 2Q v  Malaysia's current account surplus decrease notably in the 2Q v  Japan's core machine orders decrease at 7.9% m/m in June

·         US – Retail sales gained 0.6% m/m in July. However, control group retail sales – which feed directly into GDP were weaker than expected, gaining 0.3% m/m. Overall, upward revisions implied the report was marginally stronger than expected.

·         US – US Initial jobless claims rose to 274k from a downwardly revised 269k. The four-week moving average edged marginally lower to 266k from 268k. Jobless claims remain at low levels and are consistent with ongoing improvement in non-farm payrolls growth and further declines in the unemployment rate.

·         Europe – Minutes from the ECB’s 16 July meeting struck a marginally dovish tone. While the Bank noted that there was a “growing number of indications that a turning point [on inflation] might well have been reached” inflation still remained “unusually low”. The Minutes also added that it was “too early to consider inflation expectations were firmly anchored again”. In terms of the economy, the Minutes noted that “the recovery in the euro area was expected to remain moderate and gradual, which was considered disappointing”.

·         Currency – After a turbulent week, markets will probably end the week with reasonable stability. European Q2 GDP and US industrial production / University of Michigan confidence will be the key drivers.

·         Equity – Equities were a mixed bag, the DAX and Euro Stoxx 50 saw solid gains while the major US bourses were little changed.

·         Rate – German bunds and US Treasury bond yields all moved higher overnight, suggesting a similar driver to equity moves.

·         Energy – Crude oil prices were weaker. WTI prices fell sharply to a six year low amid rising concerns around China’s economic slowdown. The lowest crude prices in six years might not be enough to put the brakes on the US supply growth.

Precious Metal – Gold ended its longest run of gains in almost three months as China eased concern about the devaluation of its currency.

INDICATIVE MAJOR CURRENCIES Last Close  8.05 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 4.0107 4.0070 4.0410 4.0050 4.0500 JPY/MYR (100) 3.2238 3.2140 3.2500 3.2100 3.2700 SGD/MYR 2.8703 2.8590 2.8930 2.8600 2.9100 EUR/MYR 4.4675 4.4720 4.5070 4.4500 4.5400 AUD/MYR 2.9511 2.9470 2.9800 2.9400 3.0100 GBP/MYR 6.2591 6.2650 6.3010 6.2400 6.3500 USD/JPY 124.41 124.20 124.61 123.80 124.80 EUR/USD 1.1139 1.1000 1.1310 1.1100 1.1210 AUD/USD 0.7358 0.7220 0.7530 0.7330 0.7430