Treasury Alert - 9 May 2014

Good Morning

EUR declined across the board after European Central Bank (ECB) President Mario Draghi was seen as opening the door to more stimulus measures in June.

Meanwhile in the United States, Federal Reserve Chair Janet Yellen, speaking to the Senate Budget Committee, repeated a statement she made on Wednesday that she expects improved year-over-year growth, though weakness in the housing sector could undermine that forecast.

The tense situation in the Ukraine weighed as pro-Russian separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war.

Gold, viewed as a safe-haven asset, was flat on the day after dropping more than 1.5% over the previous two sessions.

In Asia, China's exports and imports returned to slight growth in April after a surprise fall in March.

China reported a 0.9% year-on-year rise in exports for April, from a 6.6% decline in March and beating forecasts for a 1.7% decline. The trade surplus more than doubled to US$18.45 billion from US$7.71 billion in March.

EUR/USD fell 0.5%, after earlier reaching a high of 1.3995, the highest since November 2011.

Draghi also flagged his concerns about the strength of the euro, which has gained more than 4% in the past six months.

USD/JPY was up 0.23% at 101.67 yen, above a 3-wwek low of 101.43 set on Wednesday.

The biggest gainer for the day was AUD, which was bolstered by stronger than expected jobs data and improvement in China exports figure for April.

NZD underperformed as investors dumped the on Wednesday when the Reserve Bank of New Zealand warned that a historically strong currency could slow the pace of future interest rate rises.

Australia's RBA releases its quarterly policy statement today.

Most Asian currencies edged up on Thursday as upbeat China trade data pointed to some stabilisation in the world's second-largest economy.

The Chinese yuan CNY=CFXS also turned firmer, providing further support to Asian peers.

USD/MYR traded a 3.2330-3.2550 range; last at 3.2350.

Overnight, USD/MYR NDF traded a 3.2230-3.2400 range; last in NY at 3.2260/80.

USD/MYR started Friday’s session gapped lower at 3.2250-2280 and expected to trade between 3.2150-2350 range today.

Bank Negara Bank left OPR unchanged at 3.0% but hinted at rate hike to rein in rising prices.

Prospects of higher local interest rates is seen positive for MYR but market to watch the impact on MGS, whether there will be selling pressure.

Linda Lopez

Derivatives Sales

Global Markets, RHB Bank Berhad

Level 3 Tower Two, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur.

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