Daily FX Update, 25 May 2016

v  US new home sales surge to 619,000 annual pace in April, the highest level since January 2008 v  US Richmond Fed Manufacturing Index in May drops to -1 v  German ZEW Economic Sentiment index falls to 6.4 due to the Brexit worry v  EPF’s investment income down 36.21% y/y for 1Q2016

OVERNIGHT MARKET UPDATE: ·         US – New home sales surged by 16.6% m/m to 619,000 annualised in April. This was well above the 520,000 market expectation and the highest level since January 2008. The three previous months were also revised higher. The supply of new homes for sale fell to 4.7 months in April. The median sales price rose by 7.8% m/m to US$321,100, following a 2.8% fall in March. ·         US – The Richmond Fed manufacturing index for May came in at -1, below market expectations of +8 and lower than previous reading of +14. However, the release noted that despite the soft current conditions, firms remained optimistic about future business conditions. ·         Euro area – The German ZEW Survey of Economic Sentiment index fell to 6.4 from the prior reading of 11.2 as uncertainties over a possible Brexit constrain a more optimistic outlook. However, the Current Situation figure rose to 53.1 as strong growth of the German economy in 1Q16 surprised the financial market experts.  ·         Currencies – US dollar rose to its highest level against the euro in nearly two months as hopes that US interest rates could rise as soon as this summer overpowered a batch of strong economic data out of Germany. Against the theme of broad dollar strength was GBP, which rose sharply against the dollar after a poll showed Britons are increasingly leaning toward a “stay” vote in the 23rd June referendum. ·         Equities – US stocks posted their largest daily gains in nearly three months as financial and tech stocks led a broad-based rally. Weak euro and strong housing data also helped to support the rally in US stocks. ·         Rates – Short-term Treasury yields closed at their highest levels since 15th March on the back of strong rally in US stock markets and the positive new-home sales reading. ·         Energy – Crude oil prices up (WTI +1.1%, Brent +0.5%) on the expectation that US data will show that inventories declined last week. ·         Precious Metals – Gold slipped for the fifth consecutive trading session, down 1.6%, closed below the US$1,230 per ounce level.

INDICATIVE MAJOR CURRENCIES Last Close 8.02 am Snapshot Expected Range for Today Bid Offer Low High USD/MYR 4.1210 4.0900 4.1350 4.0880 4.1330 JPY/MYR 3.7467 3.7180 3.7520 3.7000 3.7700 SGD/MYR 2.9821 2.9670 2.9930 2.9500 3.0100 EUR/MYR 4.5945 4.5570 4.6050 4.5300 4.6200 AUD/MYR 2.9589 2.9410 2.9740 2.9200 2.9900 GBP/MYR 6.0274 5.9850 6.0310 5.9600 6.0700 USD/JPY 109.99 109.94 110.35 109.54 110.54 EUR/USD 1.1149 1.0980 1.1290 1.1080 1.1190 AUD/USD 0.7180 0.7030 0.7340 0.7140 0.7240 Source: Bloomberg, AmBank