Daily FX Update, 20 March 2014

OVERNIGHT MARKET UPDATE: ·         The FOMC revised higher its interest rate forecasts which were published after its regular policy meeting in which it reduced its monthly asset purchase program (APP) by a further USD10bn to USD55bn. Fed Chair Janet Yellen stressed the economic outlook was little changed since December despite the recent slowing in activity. ·         However, median FOMC member projections now suggest the FFR by end-2015 and end-2016 will be 1.0% and 2.25% respectively (previously 0.75% and 1.75% respectively). Regarding forward guidance on when the Fed may start to hike the Fed Funds rate, the Fed said it will now consider a "wide range" of factors instead of relying mainly on the unemployment rate. ·         In FX markets the FOMC statement, together with the accompanying press conference likely drew a line under the USD as the short end re-prices risks of a slightly earlier rates hike, but did not cause the USD to break out of recent ranges. For currency markets more broadly, the USD will not gain enough momentum to rally significantly against the EUR and GBP in the near-term. The Philadelphia Fed Survey should provide fresh information regarding the strength in the US economy through March. ·         US Treasuries sold off across the curve. The 2-year bond yield increased 7bps to 0.42%, the 5-year bond yield jumped 17bp to 1.71% and the 10-year bond yield rose 10bps to 2.77%. ·         US equities declined following a less dovish than expected FOMC statement. The S&P 500 declined 0.6% to 1,861, the Dow Jones fell 0.5% to 16,222 and the Nasdaq eased 0.5% to 4,310. ·         Oil prices were mixed overnight, with WTI futures rising 1.0% to USD100.37 per barrel, while Brent futures fell 0.7% to USD105.93 per barrel. ·         The spot gold price dropped 2.0% to USD1,329.6 per ounce.

INDICATIVE MAJOR CURRENCIES Last Close  7.55 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 3.2782 3.2700 3.2880 3.2600 3.3050 JPY/MYR (100) 3.1986 3.1900 3.2150 3.1700 3.2400 SGD/MYR 2.5742 2.5660 2.5920 2.5500 2.6100 EUR/MYR 4.5305 4.5150 4.5510 4.4900 4.5900 AUD/MYR 2.9599 2.9490 2.9790 2.9300 3.0000 GBP/MYR 5.4208 5.4050 5.4490 5.3800 5.4900 USD/JPY 102.49 102.30 102.50 101.90 102.90 EUR/USD 1.382 1.3810 1.3840 1.3770 1.3880 AUD/USD 0.9029 0.9020 0.9060 0.8990 0.9090 Best regards, FX Research & Strategy AmBank Group Markets +603 2059 8606 (DL) +03 2031 4821 (Fax) Level 23, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur