Daily FX Update, 06 May 2016

v  Fed’s Bullard says he is undecided on raising rates in June v  US initial jobless claims climb to 274,000; continuing claims drop to the 16-year low v  ECB says economic recovery to proceed on domestic demand and investment v  UK service sector in April expands at the slowest pace in more than three years v  Mustapa: Malaysia explores possibility of clinching FTA with Sri Lanka

OVERNIGHT MARKET UPDATE: ·         US – Fed Bullard (voting member) was undecided on the path of US rates, noting it was difficult to conclude whether rate predictions by the Fed or by the markets were more accurate. ·         US – The initial jobless claims climbed by 17,000 to a five-week high of 274,000 in the last week of April, but still below the key 300,000 mark for 61 straight months. On the other hand, the continuing claims, in the seven days stretching from April 17 to April 23, fell to a nearly 16-year bottom. ·         Euro area – ECB said the economic recovery is expected to proceed on domestic demand and investment but cautioned that the recovery is weighed down by the ongoing balance sheet adjustments. "Domestic demand, in particular, continues to be supported by the ECB's monetary policy measures," the bank said in its economic bulletin. ·         UK – The service sector expanded at the slowest pace in more than three years in April largely reflecting economic uncertainty ahead of the EU referendum. The services PMI index dropped to 52.3 and the composite index consequently dropped to 51.9. ·         Currencies – The US dollar stretched gains against its main rivals into a third day after the continuing jobless claims dropped to the lowest in 16 years. ·         Equities – US stocks closed little changed as mixed economic data and disappointing earnings weighed against a rise in oil prices.  ·         Rates – US Treasury yields continued to down for a third session, reflecting nervousness among investors ahead of the key employment report due tonight.  ·         Energy – Supply disruptions and closures helped push crude oil prices higher, despite the stronger USD. The wildfire in the oil-sands regions of Canada is still wreaking havoc with many producers. Meanwhile, EIA data also showed that production fell another 113,000 b/d to 8.83mb/d, the lowest level since November 2014. ·         Precious Metals – A slightly stronger USD outweighed growing expectations of a weaker jobs report, pushing gold prices lower.

INDICATIVE MAJOR CURRENCIES Last Close 8.02 am Snapshot Expected Range for Today Bid Offer Low High USD/MYR 4.0078 3.9940 4.0290 3.9920 4.0370 JPY/MYR 3.7358 3.7170 3.7530 3.7000 3.7800 SGD/MYR 2.9508 2.9340 2.9690 2.9300 2.9900 EUR/MYR 4.5737 4.5550 4.6030 4.5300 4.6300 AUD/MYR 2.9942 2.9810 3.0160 2.9700 3.0400 GBP/MYR 5.8061 5.7920 5.8300 5.7600 5.8800 USD/JPY 107.28 107.19 107.60 106.79 107.79 EUR/USD 1.1412 1.1250 1.1560 1.1350 1.1460 AUD/USD 0.7471 0.7320 0.7630 0.7430 0.7530 Source: Bloomberg, AmBank