Daily FX Update, 06 August 2015

v  US’s non-manufacturing ISM survey records a strong rise to 60.3 in July v  UK’s Reserve Governor Powell states that while the time to begin hiking interest rates “is coming” he remains undecided on when lift-off will occur v  UK’s services PMI declines modestly to 57.4 in July v  Malaysia’s exports rise unexpectedly in June at 5.0% y/y v  Thailand keeps key rates unchanged at 1.50%

·         US – Non-manufacturing ISM survey recorded a strong rise to 60.3 in July from 56.2, taking the index to the highest level since 2005. The details of the survey were robust, with the employment component rising to the highest level on record. The new orders and new export orders also recorded solid gains. Overall, these data are consistent with robust economic activity and a further improvement in labour market conditions.

·         US – ADP employment report recorded a 185k rise in July against market expectations of a 215k gain. The ADP has not been an especially reliable indicator for monthly changes in private non-farm payrolls.

·         US – Federal Reserve Governor Powell stated that while the time to begin hiking interest rates “is coming” he remains undecided on the timing and that he is going to be “very, very focused on the data”.

·         UK – Services PMI declined modestly to 57.4 in July from 58.5, but remains consistent with a solid pace of GDP growth moving into Q3.

·         Euro area – The final composite euro area PMI was revised marginally higher in July to 53.9 from 53.7, it was largely driven by modest upward revision to the German data.

·         Currency – AUD may find some support on crosses from employment today, while GBP is in focus from ‘Super Thursday’.

·         Equity – US equities showed more muted gains, with the Dow Jones flat and the S&P 500 up just 0.3%.

·         Rate – US yields rose in response to the strong non-manufacturing ISM print, with the 10-year yield rising 3 bps to 2.27%.

·         Energy – Crude oil prices fell overnight. WTI prices fell even after EIA data showed US crude stockpiles declined 4.4m bbl last week. The reason for the decline in prices was a large build-up in finished product stocks (gasoline and distillate) driven by high refining utilisation levels.

Precious Metal – Gold traded lower by 0.58% below $US1100 per ounce. 

INDICATIVE MAJOR CURRENCIES Last Close  8.05 am Snapshot        Bid                   Offer Expected Ranges for Today         Low                       High USD/MYR 3.8777 3.8690 3.9030 3.8670 3.9120 JPY/MYR (100) 3.1049 3.0930 3.1260 3.0900 3.1500 SGD/MYR 2.7994 2.7900 2.8220 2.7900 2.8400 EUR/MYR 4.2162 4.2210 4.2560 4.2000 4.2900 AUD/MYR 2.8486 2.8360 2.8690 2.8200 2.8900 GBP/MYR 6.0512 6.0440 6.0800 6.0200 6.1300 USD/JPY 124.89 124.63 125.04 124.23 125.23 EUR/USD 1.0873 1.0750 1.1060 1.0850 1.0960 AUD/USD 0.7346 0.7190 0.7500 0.7300 0.7400