Daily FX Update, 16 July 2015

v  Yellen reiterates that if the economy evolves as expected, the Fed remains on track to hike this year v  UK March-May period unemployment rate increase to 5.6% from 5.5% v  Malaysia’s CPI increase 2.5% y/y in June v  BoJ keeps its policy steady while lower down its inflation projection v  China's economy grow 7% y/y in the second quarter v  Indonesia’s trade balance turns to a surplus in June from a deficit in the previous year

·         US – Federal Reserve Chair Yellen stuck to her recent script, reiterating that if the economy evolves as expected, then it would be “appropriate at some point this year” to commence normalising monetary policy. Yellen also continued to indicate that greater emphasis should be placed on the “gradual” pace of normalisation, rather than the timing of lift-off.

·         US – Industrial production increased 0.3% m/m in June, rebounded back from a 0.2% m/m decline in May. While the manufacturing component was flat, mining output rose solidly.

·         US – Empire manufacturing survey rose to +3.9 in July from -2.0 in June. However, the details of the survey were a little disappointing, with both the employment and new orders components weakening. 

·         UK – Unemployment rate rose to 5.6% from 5.5% and employment fell 67,000 over the three months to May. The pace of wages gains picked up modestly, rising 3.2% y/y over the three months to May from 2.8% y/y.

·         Currency – The AUD fell to a new cyclical low following a hawkish Yellen (strong USD), with CAD (BoC rate cut) and NZD (weak GDT auction) leading the USD charge. GBP remained strong despite data weakness.  

·         Equity – US stocks gave up gains late in the session, with the S&P 500 and Dow Jones down 0.1% and unchanged respectively.

·         Rate – 10-year US Treasury yields initially lifted, but these moves were later more than unwound, with yields down 5 basis points.

·         Energy – Crude oil prices were weaker. EIA data showed US crude inventories fell 4.3 million barrels for the week ended 10 July. The decline in crude stock was driven by a jump in refinery throughput to a record high of 16.8 million bbl. However, stocks at Cushing increased, which weighed on prices.

·         Precious Metal – Gold price sinks lower after Janet Yellen said the U.S central bank is on track to raise interest rate later this year. 

INDICATIVE MAJOR CURRENCIES Last Close  8.15 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 3.8030 3.7900 3.8240 3.7880 3.8330 JPY/MYR (100) 3.0699 3.0550 3.0890 3.0500 3.1100 SGD/MYR 2.7838 2.7700 2.8040 2.7700 2.8200 EUR/MYR 4.1631 4.1470 4.1810 4.1200 4.2100 AUD/MYR 2.8017 2.7880 2.8210 2.7700 2.8400 GBP/MYR 5.9433 5.9320 5.9680 5.9000 6.0200 USD/JPY 123.88 123.72 124.13 123.32 124.32 EUR/USD 1.0947 1.0780 1.1090 1.0880 1.0990 AUD/USD 0.7367 0.7210 0.7520 0.7320 0.7420